TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 404
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.... cause notice dt.10.11.2005 was issued, proposing demand of CENVAT Credit amounting to Rs. 54,38,492.00 alongwith interest taken wrongly on the fuel used in the generation of electricity cleared to DHBVNL during the period 01.01.2005 to 30.06.2005. It has also proposed to impose penalty of equal amount of duty. By the impugned order, the Commissioner disallowed the CENVAT Credit of Rs. 54,38,492.00 alongwith interest and imposed a penalty of equal amount of CENVAT Credit under Rule 15 of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 for contravention of Rule 2(k) and 3 of the CENVAT Credit Rules, 2004. 2. The learned Advocate for the Appellant submits that the Electricity Board permitted them to use the electricity for captive consumption. They are not allowed to supply the electricity so generated from their captive plant. He further submits that a portion of the electricity generated was sent to power grid for synchronization and it was received back by the Appellant in their unit after synchronization. The Power Grid charged 10% of the value of the electricity from the Appellant for providing facility of synchronization. He submits that there is n....
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.... within the factory of production. So, the Appellant ought to have reversed the credit to the portion of electricity wheeled out to the grid as per CENVAT Credit Rules. The learned Authorised Representative also filed Written Submissions. 4. After hearing both the sides and on perusal of the records, we find that the Appellant set up a power plant in their factory for captive consumption. HSEB by letter dt.30.11.1098, permitted the Appellant for parallel operation of captive power plant installed at their factory subject to condition that the Appellant will not be allowed to supply/sell the energy so generated from their captive plant, without specific approval from the Board. Wheeling charges in the form of energy will be done at 10% of the power injected from their captive power plant into the synchronisation system. The General Manager of DHBVNL (Dakshin Haryana Bijli Vitran Nigam Ltd) by letter dt.17.02.2006 clarified that the excess energy generated cannot be treated as a sale of energy to the grid. The relevant portion of the said letter dt.17.02.2006 is reproduced below:- "Please refer to your reference No.JSL/Electrical/2006/3314, dt.17.02.2008 regarding the subject cited....
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....venue strongly relied upon the decision of the Hon ble Supreme Court in the case of M/s Maruti Suzuki Ltd (supra). It is submitted that in view of the decision of the M/s Maruti Suzuki Ltd (supra), the order dt.21.08.2008 of the Tribunal in the Appellant s own case would not be applicable. The relevant portion of the decision in the case of M/s Maruti Suzuki Ltd (supra) is reproduced below:- "20. 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 is 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 the....
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.... integrally connected to what was used in the manufacture of the final product and its nexus with the ultimate production of final product is missing and it is hit by Rule 2(k) of Rules, 2004. 10. We are not impressed with the submission of the learned Authorised Representative for the Revenue for the reason that it is settled law now that there is no requirement of one to one co-relation between input and final product under the MODVAT/CENVAT scheme. As per Rule 2(k) of Rules, 2004 input means all goods used in the factory by the manufacturer of the final product. It is seen that Rule 4(5)(a) of Rules, 2004 provides that the CENVAT Credit shall be allowed even if any input or capital as such or after being partially processed are sent to a job worker for further processing, testing etc or any other purpose, and it is established from the records produced by the manufacturer that the goods are received back in the factory. The expression any other purpose in Rule 4(5)(a) have wide amplitude. Thus, on reading of Rule 2(k) and Rule 4(5)(a) of the Rules, 2004, it is clear that the input as such or after partial process cleared from factory for job work and returned back, it would rem....
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....uch situations both the clinker and the electricity supplied to the grinding unit by the power plant can be treated as inputs supplied to job worker (grinding unit) for which credit has been taken by the clinker unit. As all the registered units belong to the same group of companies, therefore, what has not been done by the appellant is not following properly the prescribed procedures. Alternately, appellant could have sold proportionate electricity generating fuel to its grinding unit by reversing proportionate Cenvat credit which could have been availed as cenvat credit by the grinding unit as per the law laid down by CESTAT, Mumbai in the case of M/s. Indorama Textiles Ltd. v. CCE, Nagpur [2007 (220) E.L.T. 471 (Tri.-Mumbai)] relied upon by the appellant. 14. From the above observations and the case laws relied upon by the appellant, it is inferred that procedures existed at the relevant time to avail Cenvat credit on inputs sent to the power plant as job worker. The only irregularity committed by the appellant was that they did not follow the prescribed procedures. It has been a settled position of law now that a substantial benefit of Cenvat credit cannot be denied for not fo....