2017 (11) TMI 14

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....o alloy. Before setting up the factory for manufacture of ferro alloy, pig iron etc., the appellant obtained necessary permission to set up a captive power plant. The power generated was proposed for use in the manufacture of pig iron/ferro alloys, as per the project report. The power plant got installed and the power generated was wheeled out to the grid since the manufacturing plant for the ferro alloys was not yet set up. Capital goods were brought into the factory and on such capital goods cenvat credit was availed by the appellant. The appellant's plant to commence production of ferro alloys got delayed and never got installed until the time of issue of show cause notice. The power plant of the appellant also subsequently became non-op....

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...., she submitted that in November, 2003, part of the stake of the appellant's company has been sold to M/s Godawari Power & Ispat Limited who had agreed to bring additional cash and operationlise the plant. Ld. Counsel further submitted that the cenvat credit cannot be ordered for recovery since the factory for manufacture of excisable goods is likely to be started shortly. She also submitted that cenvat credit will be admissible even though dutiable capacity was set up subsequently. She also relied on the following case laws: (i) Sagar Sugars & Allied Products Ltd. Vs. CCE, Guntur - 2010 (261) ELT 1102 (Tri. Bang) (ii) CCE, Bangalore Vs. Kailash Auto Builders Ltd. - 2012 (280) ELT 49 (Kar.) (iii) State of Haryana Vs. Dalmia Dadr....

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....he manufacture of excisable goods in the factory. Rule 6(1) and 6(4) of the Cenvat Credit Rules, 2004 lay down that no cenvat credit shall be allowed on inputs/ input services as well as capital goods which are used only in the manufacture of exempted goods or for provision of exempted services. In the present case, the capital goods on which cenvat credit has been availed, have been used only for the purpose of generation of electricity which stands wheeled out to the grid. It is on record that no part of the electricity has been used for manufacture of excisable goods since such plant was never set up. Electricity is not chargeable to any excise duty and falls within the definition of exempted goods in terms of Rule 2(d) of the Cenvat Cre....