TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal denies Cenvat credit for capital goods used in electricity generation for sale</h1> <h3>Chodavaram Cooperative Sugars Ltd. Versus Commissioner of Central Tax – Visakhapatnam - GST</h3> Chodavaram Cooperative Sugars Ltd. Versus Commissioner of Central Tax – Visakhapatnam - GST - TMI Issues:1. Denial of Cenvat credit on capital goods used in the production of electricity for sale to the grid.2. Interpretation of Rule 6(4) of CCR 2004 regarding availment of Cenvat credit on capital goods.3. Authenticity of Power Purchase Agreement (PPA) between the appellant and APTRANSCO.4. Applicability of extended period of limitation and imposition of penalties.Analysis:1. The appellant, a cooperative sugar mill, appealed against the denial of Cenvat credit on capital goods used in generating electricity for sale to the grid. The appellant argued that since the electricity generated was also used for their sugar plant, they should be entitled to the credit. However, the departmental representative contended that the Power Purchase Agreement (PPA) clearly stated that the second turbine generator (TG-2) was exclusively meant for supplying power to the grid, making it an exempted product. The Tribunal noted the PPA's provisions and found that the appellant's use of TG-2 for the sugar plant was in violation of the agreement, and no evidence showed excisable products were manufactured during this connection. Consequently, the appellant was not entitled to Cenvat credit on TG-2.2. Rule 6(4) of CCR 2004 was examined, which prohibits Cenvat credit on capital goods used exclusively for manufacturing exempted goods. The Tribunal emphasized that if the capital goods were used for both dutiable and exempted products, the credit could be availed. Despite the appellant's arguments and reliance on case laws, the Tribunal found that TG-2, as per the PPA, was exclusively meant for supplying power to the grid, making it ineligible for Cenvat credit based on the factual matrix of the case.3. The authenticity of the PPA between the appellant and APTRANSCO was crucial in determining the purpose of TG-2. The Tribunal noted the clauses in the agreement specifying the isolation and alignment of TG-2 with the grid for power supply. Despite some log books indicating connection to the sugar plant, the Tribunal deemed the PPA as the more authentic document. The inconsistent evidence provided by the appellant did not support their claim for Cenvat credit on TG-2.4. Regarding the extended period of limitation and penalties imposed, the Tribunal upheld their invocation. The appellant's conscious decision to take ineligible Cenvat credit, as evidenced by the PPA terms, constituted a violation with the intent to evade duty payment. Thus, the extended period of limitation was correctly applied, along with penalties, leading to the rejection of the appeal.In conclusion, the Tribunal upheld the impugned order, denying Cenvat credit on capital goods used for electricity generation for sale to the grid, based on the terms of the Power Purchase Agreement and Rule 6(4) of CCR 2004.
TaxTMI 