Cenvat Credit Allowed for Inputs in Electricity Generation for Sister Unit Manufacturing Dutiable Products.

The Tribunal set aside the impugned orders and allowed the appellant's appeals, affirming that Cenvat credit on inputs and input services used for electricity generation and supplied to a sister unit for manufacturing dutiable final products is permissible. This decision followed the precedent established in a similar case and affirmed by the Hon'ble Raj. HC, thereby rejecting Revenue's appeals and providing consequential relief to the appellant.

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Issues involved:
- Appeal against reversal of Cenvat credit on electricity generated and supplied to another unit for manufacturing final products.

Detailed Analysis:
The appellant, engaged in manufacturing High Carbon Ferro Chrome and Chrome Ore Briquette, appealed against orders requiring them to reverse Cenvat credit on electricity generated in their factory and supplied to another unit for final product manufacturing. The appellant availed 50% Cenvat credit on inputs and input services upon supplying surplus electricity to the other unit, with the remaining 50% availed in the subsequent month. The Revenue contended that Cenvat credit was not permissible for electricity supplied free of cost to another unit. Show cause notices were issued, leading to confirmation of demand on Cenvat credit availed for electricity generation and transfer to the other unit, along with interest. The Tribunal considered a similar case involving M/s. Shree Cement Ltd., where Cenvat credit on electricity transferred to sister concerns was upheld. The Tribunal ruled that Cenvat credit on input and input services for electricity transferred to sister concerns need not be reversed, as long as the electricity is used in manufacturing dutiable final products. The Hon'ble Rajasthan High Court affirmed this decision, establishing precedent. Consequently, the Tribunal held that the appellant rightfully availed Cenvat credit on inputs and input services used for electricity generation and supply to the sister unit, leading to the rejection of Revenue's appeals and allowance of the appellant's appeals.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief if necessary. The judgment established that Cenvat credit on inputs and input services for electricity generation and transfer to another unit for manufacturing final products was permissible, following the precedent set in a similar case and affirmed by the Hon'ble Rajasthan High Court.

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