TaxTMI 
TaxTMI 
2009 (11) TMI 648
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....n following substantial questions of law :- (i) Whether it will be violation of Rule 2(h), 2(g) and 6(4) of the Cenvat Credit Rules, 2002 if Cenvat Credit is allowed to the Respondent on the electricity generated captively but instead of utilizing it through distribution lines of the M.P.E.B. (now CSEB) ? (ii) Whether the learned Appellate Tribunal has erred in allowing the credit on the impugned goods in toto instead of allowing proportionate credit on the electricity consumed within the factory out of the total electricity generated captively. 2. Briefly stated facts of the case, as detailed in the order of Commissioner (Appeals), are that the respondent has thermal power plant....
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.... to their sister concern were not available, the whole of the Cenvat Credit availed by the respondent was disallowed. 4. On appeal by the respondent, the Commissioner partly allowed the appeal and held that the respondent is eligible to the credit to the extent of electricity used within the factory. The respondent preferred an appeal against the order of the Commissioner (Appeals) Customs & Central Excise before the Tribunal. The Tribunal relying upon its decision in the case of Kothari Sugars & Chemicals Ltd. v. C.C.E., Trichy [2006 (196) E.L.T. 35] allowed the appeal and held that there is no reason to deny modvat credit to the respondent. The electricity generated in the power plant used by the appellant was not used exclusively....
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....espondent submitted that from bare reading of Rule 6(4) of the Rules, it is evident that Cenvat Credit may be denied on such capital goods which are exclusively used in manufacture of exempted goods. In the instant case, electricity generated in the captive power plant of the respondent is utilized for production of final product sponge iron and only surplus electricity is sold to M.P. Electricity Board through their grid and, therefore, it cannot be said that the capital goods used in the power plant are exclusively used for exempted goods. 7. We have heard learned counsel for the parties. 8. Indisputably, the respondent is engaged in a production of sponge iron and the final product is leviable to excise duty. It has a cap....
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....products whether directly or indirectly and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. 6(4) :- No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances ....