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of <h1>Cenvat Credit Allowed for Electricity in Manufacturing Units</h1> The Tribunal held that Cenvat Credit is admissible for inputs used in generating electricity supplied to various units within a manufacturing entity. The ... CENVAT Credit - Furnace Oil and lubricating oils used in generation of electricity by the captive power plant and DG sets located at the clinker unit of the appellants - electricity is supplied to the grinding unit, captive jetty, water desalination (DMW) plant, administrative building and residential colony of the appellants - HELD THAT:- The issue in hand has been considered in the case of SANGHI INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAJKOT [2006 (4) TMI 422 - CESTAT, NEW DELHI] and the Cenvat credit was allowed in respect of inputs used in the captive power plant and desalination water to the extent it is used in the factory of the appellant, jetty and administrative building, however, the credit attributed to residential colony of the appellant is not admissible. Appeal allowed in part - decided partly in favor of assessee. Issues Involved:1. Eligibility of Cenvat Credit on Furnace Oil and lubricating oils used in the generation of electricity supplied to various units.2. Specific eligibility of Cenvat Credit on electricity supplied to the grinding unit.Issue-Wise Detailed Analysis:1. Eligibility of Cenvat Credit on Furnace Oil and lubricating oils used in the generation of electricity supplied to various units:The primary issue revolves around whether the Cenvat Credit availed on Furnace Oil and lubricating oils used in the generation of electricity by the captive power plant and DG sets located at the clinker unit is eligible when the electricity is supplied to units other than the clinker unit, such as the grinding unit, captive jetty, water desalination (DMW) plant, administrative building, and residential colony.The Tribunal examined the facts and noted that the electricity generated was used in the manufacture of cement, which is the final product. The Tribunal referenced previous judgments, particularly in the appellant's own case (Sanghi Industries Ltd-2014 (302) ELT 564 (T)), where it was established that Cenvat Credit is admissible for inputs used in the generation of electricity supplied to the grinding unit and captive jetty. However, credit was disallowed for electricity supplied to residential colonies and the DMW plant where water was supplied to the Gujarat Water Board.The Tribunal upheld that the Cenvat Credit is admissible for inputs used in electricity generation to the extent it is used in the factory for manufacturing the final product, in the jetty, and the administrative building. However, the credit attributed to electricity used in the residential colony is not admissible.2. Specific eligibility of Cenvat Credit on electricity supplied to the grinding unit:The second issue focused on whether Cenvat Credit availed on Furnace Oil and lubricating oils used in the generation of electricity by the captive power plant located at the clinker unit is eligible when the electricity is supplied to the grinding unit.The Tribunal referenced previous decisions, particularly the judgment in Sanghi Industries Ltd-2014 (302) ELT 564 (T), which allowed Cenvat Credit for inputs used in electricity generation supplied to the grinding unit. The Tribunal reiterated that the grinding unit, although situated at a distance and having separate Central Excise Registration, is considered part of the same factory for the purpose of availing Cenvat Credit.The Tribunal concluded that the Cenvat Credit is admissible for inputs used in generating electricity supplied to the grinding unit, following established legal precedents. The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal in part, affirming that the credit is not admissible for electricity used in the residential colony but is admissible for other units including the grinding unit and jetty.Conclusion:The Tribunal's judgment comprehensively addressed the eligibility of Cenvat Credit on inputs used in the generation of electricity supplied to various units. It upheld the admissibility of credit for electricity used in the grinding unit, jetty, and administrative building, while disallowing credit for electricity used in residential colonies. The judgment aligns with previous legal precedents and clarifies the application of Cenvat Credit rules in the context of electricity generation and usage within different units of a manufacturing entity.
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