Cenvat credit for captive power plant input services upheld where the power division formed an integrated part of the manufacturing unit.

Cenvat credit on service tax paid for services used in a captive power division was held admissible where the power division formed an integrated part of the assessee's manufacturing unit. The tribunal relied on prior decisions in the assessee's own case treating the Renusagar Power Division and the manufacturing unit as one concern, with electricity generated therefrom regarded as coming from an internal source. In the absence of any specific exclusion in the later Cenvat Credit Rules for input services used in such captive consumption, the Revenue's objection was rejected and the credit order was sustained.

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Issues: Whether Cenvat credit of service tax paid on services used in the Renusagar Power Division, treated as a captive power plant and part of the assessee's integrated manufacturing unit, was admissible under the applicable Cenvat Credit Rules.

Analysis: The dispute turned on whether the Renusagar Power Division had to be treated as a captive power plant forming one integrated concern with the assessee. The prior decisions in the assessee's own case had already held that the power division and the manufacturing unit were one concern and that energy generated therefrom was to be treated as received from an internal source of generation. No provision in the subsequent Cenvat Credit Rules was pointed out to show that input services used for such captive consumption were excluded from credit.

Conclusion: The credit was held admissible and the Revenue's challenge was rejected.

Final Conclusion: The impugned order allowing Cenvat credit was sustained, and all the Revenue's appeals failed.

Ratio Decidendi: Where a power division is treated as an integrated part of the assessee and functions as a captive power plant, credit on eligible input services used for that captive arrangement cannot be denied in the absence of a specific exclusion in the governing credit rules.

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