AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 428
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....generated is transmitted to the clinker and grinding units using the company's private 200Kv transmission lines installed within the company's premises. The desalination plant uses electricity to de-mineralize water for supply to the other units, the clinker unit uses the electricity to manufacturing clinker for supply to grinding unit, the grinding unit uses the electricity to manufacture cement from clinker, the captive jetty is used to export the cement and the administrative building is used to manage supervise the smooth functioning of all the units. The periodical show cause notices were issued to the appellants proposing to deny and recover Cenvat Credit of duty paid on inputs and tax paid on inputs services used in the generation of electricity at the captive power plant and DG sets to the extent that the electricity is supplied to units other than clinker unit on the ground that the same cannot be held to have been used in the factory of production. The adjudicating authority deny the cenvat credit in respect of duty paid on inputs and Service Tax paid on input services vide Orderin- Original dated 28.06.2013 and 23.08.2013. In another proceeding against which Appeal No. E....
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....e the Final Order dated 07.11.2017, therefore, the Cenvat credit of inputs used in generation of electricity supplied to the grinding unit and jetty stands settled by this Hon'ble Tribunal in the appellants' own case. He also placed reliance upon the following judgments:- • Sanghi Industries Ltd-2014 (302) ELT 564 (T) • Indorama Textiles Ltd-2007 (2200) ELT 471 (T) • Indorama Textiles Ltd-2010 (260) ELT 382 (Bom.) • Solaris Chemtech Limited-2007 (214) ELT 481 (S.C.) • Shree Cement Ltd-2018 (160) GSTL 196 (Raj.) 3. Shri. L. Patra, Ld. Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submissions made by both the sides and perused the records. The appeal vise issue involved is as under:- Appeal No. E/13837/2013 (i) Whether the Cenvat Credit availed on Furnace Oil and lubricating oils used in generation of electricity by the captive power plant and DG sets located at the clinker unit of the appellants is eligible to the extent that the electricity is supplied to the grinding unit, captive jetty, water de....
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....t Credit Rules, 2004 with respect to electricity supplied to : (a) The DMW plant and administration block situated within the clinker unit? (b) The residential colony of the clinker unit? (c) The grinding unit and the jetty situated at a distance of 14 km from the clinker unit? 8. Appellant has argued that as per their own case reported as 2006 (206) E.L.T. 575 (Tri.-Del.) the Power plant can be a job worker of the appellant and that the inputs sent by the appellant to the job worker power plant, for generation of electricity brought back to the appellant for manufacture of final product, were held to be eligible for Cenvat credit. We find that the DMW unit and the administrative block, are situated within the Clinker unit of the appellant and use of electricity in these units has to be considered as a use in connection with the manufacture of final product clinker. Therefore, proportionate credit of inputs sent by the Clinker unit to the Power plant under Rule 4(5)(a), corresponding to generation of electricity used in the DMW plant and administrative block, will be eligible as Cenvat credit in the same manner as has been held by this Tribunal i....
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....ference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between and they are not complimentary to each nor they are subsidiary to each other. The end-product is also different, one manufactures duplex board and the other manufactures paper. They are separately registered with the Central Excise Department. The staff is separate, their management is separate. It is also not the case of revenue that end-product of one factory is raw material for the other factory. From the above facts it is apparent that there is no commonality between the two factories, both are separate establishments run by separate Managers though at the apex level it is maintained by the appellant company. There are separate staff, separate finished goods. Simply because both the factories may have common boundaries that will not make it one factory. Accordingly, we are of the opinion that the view taken by the Tribunal does not appear to be wellfounded and likewise, the view taken by the Commissioner, Central Excise. Accordingly, we allow both these app....
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.... 12. Appellant has also agitated that procedural irregularities or noncompliance cannot be made the grounds for denying admissible Cenvat credit when electrify supplied has been used for making goods on which duty is payable. It was argued that Rule 4(5)(a) and Rule 4(6) of the Cenvat Credit Rules, 2004 the clinker unit could have sent 'clinker' under job work to the grinding unit and cleared the final goods on payment of duty from the grinding unit. The said Rule 4(5)(a) and Rule 4(6) the Cenvat Credit Rules, 2004 are reproduced below : "Rule 4 : Conditions for allowing CENVAT credit. - (5)(a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being se....
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....erly 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 following the prescribed procedures when it is not disputed that inputs on which credit is taken have been utilized for manufacture of final product on which Central Excise Duty has been paid/payable. In the case of sister concerns such captive consumption of materials become a case of revenue neutral exercise. It is not the case of the Revenue that....