2017 (7) TMI 680

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....o-generation plant. 2. The appellants are manufactures of sugar and molasses and erected a co-generation plant, at their sugar factory, in order to meet the steam requirement to produce electricity. They availed CENVAT credit on input services namely construction services, erection and commissioning services, management consultancy service, consulting engineering service etc. used in relation to the production of electricity by co-generation plant. Department was of the view that since appellant did not maintain separate accounts with regard to these input services which were used for generation of electricity as well as dutiable products (sugar), the credit availed on the input services is not eligible. A show cause notice was issued al....

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.... consideration from the factory. That electricity would thus become exempted goods as per the amendment only with effect from 1.4.2015. That the period involved being prior to 1.4.2015, electricity cannot be considered as an exempted product and therefore the denial of credit is unjustified. 4. Against this, the learned AR Shri A. Cletus reiterated the findings in the impugned order. However, he contended that since the appellant did not maintain separate accounts for the common input service used for dutiable products as well as generation of electricity which is sold outside the factory, are not eligible to avail credit on the input services. 5. We have heard the submissions made by both sides. 6. The issue whether electricity is....

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....al as well as the High Court have taken a view that the assessee has to reverse proportionate credit pertaining to the electricity that is sold outside whereas the assessee would be eligible to avail credit on input services pertaining to electricity which is captively consumed. In the case before us, the quantum of electricity that is sold outside has to be determined and for this limited purpose, the matter requires to be remanded to the adjudicating authority. 8. From the above discussions, we are of the considered view that the appellant is eligible to avail credit on the input services pertaining to electricity which is captively consumed. We hold that appellants are not eligible for credit on input services used for electricity whi....