TaxTMI 
TaxTMI 
2014 (2) TMI 280
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....ed by the assessee was used for manufacture of final products within the factory of production and a part of electricity generated was supplied to other units viz., M/s. SRF Ltd., Viralimalai and M/s. SRF Ltd. Gummidipoondi through TNEB Grid and M/s. SRF Polymers, Manali, directly. 3. The assessee reversed the credit duty on furnace oil used for generation of electricity supplied to the other units up to August, 2002 by adopting the lowest value of furnace oil procured during the relevant period. The Department found that there was a short payment or short debit of duty to the tune of Rs. 3,27,135/- on the furnace oil used for generation of electricity supplied to other units during the period March, 2002 to August, 2002. Therefore, notice vas issued to the assessee calling upon them to show cause as to why credit of duty of Rs. 3,27,135/- short paid/short reversed on the furnace oil used for generation of electricity supplied to other units during the period March, 2002 to August, 2002 should not be recovered. 4. The assessee in their explanation submitted that they are eligible for the total credit of duty on furnace oil and lubricating oil used by them for genera....
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....of Cenvat Credit Rules, 2002 by holding that Cenvat credit is admissible on the portion of furnace oil used for generation of electricity wheeled out to the other units. 10. The learned counsel for the assessee by placing reliance on the judgment of the Supreme Court in Jaypee Rewa Cement v. Commissioner of Central Excise, M.P., 2001 (133) E.L.T. 3 (S.C.) contended that the explanation contained in Rule 57A is merely meant to enlarge the meaning of the word "input" and does not in any way restrict the use of the input within the factory premises nor does the rule require the inputs to be brought into the factory premises at any point of time. According to the learned Counsel, the furnace oil was used for generation of electricity and it was supplied to the other units of the assessee. Therefore, it cannot be said that the credit was improperly claimed. The learned Counsel fairly submitted that the assessee has sold the electricity for manufacture of final products to one another Company and to that limited extent, the Commissioner (Appeals) was justified in reversing the credit. Consideration of the issue :- 11. The assessee - M/s. SRF Limited are manufacturers o....
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....nerated was supplied to the other units viz., M/s. SRF Ltd., Viralimalai and M/s. SRF Ltd., Gummidipoondi through TNEB Grid and M/s. SRF Polymers, Manali, directly. Though the Assessing Authority and the Appellate Authority rejected the claim made by the assessee, the CESTAT, by following an earlier decision of the very same Tribunal in Essar Steel Limited v. Commissioner of Central Excise reported in 2001 (129) E.L.T. 213, allowed the appeal filed by the assessee. 14. The issue raised by the assessee is no longer res integra in view of the judgment of the Supreme Court in Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi-III, (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.). 15. In Maruti Suzuki, the specific question was as to whether the Department was right in reversing proportionate Cenvat credit to the extent of power wheeled out by the appellant to its sister units, vendors, joint ventures. The assessee had used Naphtha fuel for generation of electricity. The electricity so generated was used in their factory premises and it was also supplied to their vendors and joint ventures. The Department reversed proportionate Cenvat credit to the extent of ....
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....ty or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time to time in favour of its joint ventures, vendors, etc. for a price and has also cleared such electricity in favour of the grid for distribution. To that extent, in our view, the assessee was not entitled to Cenvat credit. 46. In short, the assessee is entitled to credit on the eligible inputs utilised in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to Cenvat credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors, etc., which is sold at a price." 16. Since the Supreme Court has made the position clear that the assessee would not be entitled to claim Cenvat credit in case where it sells electricity outside the factory to joint ventures, vendors, etc., the finding given by the Tribunal is liable to be set aside. 17. The learned couns....