CENVAT credit for co-generation plant capital goods remains admissible despite partial supply of electricity to the grid.

CENVAT credit was treated as admissible on capital goods used in a co-generation plant within factory premises, including TMT bars, rods and angles, because the plant was used for electricity generation and the dispute had already been settled by earlier decisions. The Tribunal followed precedents holding that such credit remains available even where the electricity generated is partly captively consumed and partly supplied to the electricity board. The controversy was considered no longer res integra, and the denial of credit was held unsustainable.

---

---

Issues: Whether CENVAT credit was admissible on capital goods, including TMT bars, rods, angles and related items used in the co-generation plant for generation of electricity, where part of the power was consumed within the factory and part was transmitted to the electricity board.

Analysis: The issue turned on the eligibility of credit on goods used in the co-generation plant installed within the factory premises. The Tribunal noted that the dispute had already been settled by earlier decisions holding that capital goods used in a co-generation power plant remain eligible for credit even when the electricity generated is partly captively consumed and partly supplied to a distribution company. The Tribunal treated the controversy as no longer res integra and followed the earlier binding and persuasive precedents relied upon by the assessee.

Conclusion: CENVAT credit was admissible on the disputed goods, and the denial of credit was unsustainable.

---