Input duty credit denied for electricity supplied to staff residences, as factory-premises location alone creates no manufacturing nexus.

Input duty credit on furnace oil used to generate electricity supplied to staff residential complexes within factory premises is not admissible under Rule 57B(iv) of the Central Excise Rules, 1944. Credit is available only where electricity generated from duty-paid inputs is used for manufacture of final products or for another purpose having a sufficient nexus with, or connection to, such manufacture. Mere location of the residential complexes inside the factory precincts does not create that nexus. Electricity supplied to staff residences is an activity unconnected with manufacture of excisable goods and falls outside the rule.

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Issues: Whether input duty credit on furnace oil used to generate electricity supplied to residential complexes situated within the licensed factory is admissible under Rule 57B(iv) of the Central Excise Rules, 1944.

Analysis: Credit under Rule 57B(iv) is available only when electricity generated from duty-paid inputs is used for manufacture of final products or for some other purpose having a nexus with, or being connected with or related to, such manufacture. The mere fact that the residential complexes are located within the factory precincts does not establish the necessary connection with production. Supply of electricity to staff residences is an activity unconnected with the manufacture of excisable goods and therefore falls outside the expression

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