CENVAT credit on furnace oil for captive electricity generation remains admissible where power supports manufacturing activity.

CENVAT credit on furnace oil used to generate electricity remained admissible where the electricity was consumed partly in manufacturing and partly for factory office and canteen purposes, because the amended definition of "input" under Rule 2(k) of the CENVAT Credit Rules, 2004, after 01.04.2011, covers goods used for generation of electricity for captive use. The Tribunal treated electricity generated and used in connection with manufacturing activity within the factory as sufficient to retain input status for the furnace oil. On that basis, the denial of credit and the consequential demand for reversal with interest were held unsustainable and set aside.

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Issues: Whether CENVAT credit on furnace oil used for generation of electricity, where the electricity was used partly in manufacturing and partly for factory office and canteen purposes, was admissible under Rule 2(k) of the CENVAT Credit Rules, 2004, and whether the demand of reversal with interest could be sustained.

Analysis: The Tribunal noted that the dispute was covered by its earlier decision in the appellant's own case for a similar post-amendment period. It relied on the amended definition of "input" under Rule 2(k) of the CENVAT Credit Rules, 2004, which, after 01.04.2011, includes goods used for generation of electricity for captive use. The Tribunal held that once the electricity generated is used in connection with manufacturing activity within the factory, the furnace oil used for such generation retains input status. On that basis, the earlier denial of credit and the consequential interest demand were found unsustainable.

Conclusion: CENVAT credit on furnace oil was admissible, and the demand for reversal along with interest was set aside.

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