TaxTMI 
TaxTMI 
2014 (9) TMI 716
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....ds payment of duty on their final products. The assessee is procuring the furnace oil and utilized the same for generation of steam/electricity and are availing CENVAT Credit on the furnace oil. The assessee was also utilizing the furnace oil for generation of steam/electricity which was used in another unit, an EOU situated in the same compound. The grievance of the Revenue is that the proportionate CENVAT Credit on furnace oil utilized in the generation of Steam/Electricity cleared to their EOU was not reversed as required in terms of Rule 57 AD (2) of Central Excise Rules 1944 read with Rules 6(2) & (3) of CENVAT Credit Rules 2001/2002/2004. Therefore, two show cause notices were issued by the Additional Commissioner of Central Excise, Bangalore-I to the assessee demanding reversal of Modvat/CENVAT Credit amounting to Rs. 42,02,282/- on furnace oil utilized in the manufacture of Steam/Electricity transferred to the EOU during the period 2001-02 to 11/05. Interest as applicable and penalty was also proposed in the above show cause notices. 3. The assessee filed its objections contending that the electricity generated has been used in their EOU unit which is the same factory prem....
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.... contended that, having regard to the definition of "input", the assessee would be entitled to the benefit of CENVAT Credit only to the extent of steam manufactured out of furnace oil is used in the factory for its production. Even if such a steam is utilized by it in it other unit in the same compound, it amounts to wheeling out or diverting the steam to another unit and the assessee is not liable for CENVAT Credit. In support of their contention, the assessee relied upon a judgment in the case of M/s. VIKRAM CEMENTS v/s CCE, INDORE reported in 2006 (194) ELT 3 (SC) as well in the case of MARUTHI SUZUKI LTD., v/s CCE, DELHI III reported in 2009 (240) ELT 641 (SC). 7. Per contra, learned counsel appearing for the assessee submitted that when the assessee establishes two units in the same compound, both of them falls within the definition of "premises" under the Act and when both the units are manufacturing excisable goods, the steam manufactured in the factory of production even if it is used in the other unit, is eligible for CENVAT Credit and therefore the orders passed by the Appellate Authorities are in accordance with law and cannot be found fault with. In support of his cont....
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.... definition. For the purpose of Central Excise Act, a 'factory' means more than one premises. 10. Rule 6 of the CENVAT Credit Rules, 2004 reads as under: "Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services: (i) The CENVAT Credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in sub-Rule (2)" Sub-Rule(2) - Where a manufacturer or provider of output service avail CENVAT credit in respect of any inputs or input services, [* * * *], and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture....
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....ould be an input for the purposes of obtaining credit on the duty payable thereon." 14. The Apex Court in Maruthi Suzuki Ltd., (supra) case, held as under: "To sum up, we hold that the definition of "input" brings within its fold, inputs used for generation of electricity or steam, provided such electricity 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, assessee was not entitled to CENVAT credit. In short, assessee the entitled to credit on the eligible inputs utilized 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 the joint ventures, vendors etc., which is sold at a pri....