TaxTMI 
TaxTMI 
2019 (11) TMI 485
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....ne (TG-1) is meant for supply of power to their own factory and the second one (TG-2) is meant for supply of power to the grid exclusively. TG-2 is parallel with the grid and is isolated from TG-1. They have entered into a Power Purchase Agreement (PPA) with the Transmission Corporation of Andhra Pradesh Ltd (APTRANSCO) for selling power from TG-2. The appellant had taken Cenvat credit of capital goods on both TG-1 and TG-2. A show cause notice dt.29.09.2006 was issued to the appellant seeking to deny Cenvat credit on both TG-1 & TG-2. After following due process, Cenvat credit on TG-1 was allowed by the original authority by Order-in-Original dt.08.06.2012 but they were denied Cenvat credit on TG-2. On appeal, this bench had remanded the m....
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...., sugar and the Cenvat credit to that extent has been allowed in the original order itself. 4. She would submit that as long as they have used the capital goods viz., TG-2 for manufacture of final products viz., sugar it is immaterial to what extent they have used the capital goods for this purpose and to what extent for production of electricity for sale to the grid. The only exclusion under Rule 6(4) is to capital goods which are used exclusively in the manufacture of exempted products. She would submit that as the power generation logs would show that they have connected TG-2 in some cases where TG-1 failed, to the sugar plant. Therefore, they are entitled for Cenvat credit. She relies on the following case laws: a. UOI vs HEG Ltd [20....
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.... would draw the attention of the bench to Paras 3, 4, 2.2 and 2.5 of the agreement and Schedule-1 & Schedule-2B of the agreement which reads as follows: "3. APERC while issuing permission for Captive consumption in O.P.Nos.92 & 299/2000 dt.27.7.2002 indicated that utilisation of power to be generated from one 7 MW TG set to be run continuously in independent (Island) mode for Captive use and sell power from the second 7 MW TG set to the licensee as per PPA between the applicant and the licensee. 4. The Company also confirmed that the 2 Nos. 7 MW TG sets are electrically isolated and the maximum export to grid from second Turbo Generator set is 6.25 MW only. Since the second TG set is in parallel with grid and is isolated from the first ....
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...., no credit of capital goods can be availed on the same. He also disputed the submission of the appellant that TG-2 is also meant for running the plant to manufacture sugar. He would submit that even if some generation logs have been maintained by the appellant with some foot notes signed by the employees of the appellant indicating TG-2 has been used for running the plant, this is contradictory to the authentic documents viz., PPA entered into between the appellant and the APTRANSCO. Therefore, he would urge that the appellant is not entitled to the Cenvat credit of capital goods on TG-2. 7. I have considered the arguments on both sides and perused the records. Rule 6(4) of CCR 2004 prohibits availment of Cenvat credit on capital goods us....
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.... There is also no evidence to substantiate that during the short interval when such connection is made, whether any excisable products have been manufactured. In view of these facts, I find that appellant is not entitled to Cenvat credit of capital goods on TG-2 set. 8. I have also considered the various case laws relied upon by the appellant. In all these cases, the dispute was that if the capital goods are used both for manufacture of final products and for manufacture of exempted products whether Cenvat credit on capital goods is admissible or otherwise. For instance, in the case of HEG Ltd (supra), the appellant was generating steam in boilers and using the steam so generated partly for manufacture of their final product in the sponge ....