TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 302
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....nai (referred to hereinafter as 'sister units'). Under an agreement dated 31.08.2012 entered into with the Tamil Nadu Generation and Distribution Corporation Limited ('TANGEDCO') the appellant had been permitted to wheel out a portion of the energy generated by the CPP to TANGEDCO for adjustment against drawal of electricity from the grid by the sister units. The drawal is not for cost and no consideration is received by the Appellant for the same. 3. The appellant had imported coal for the generation of electricity in the CPP availing CENVAT credit of Counterveiling Duty (CVD) on such imports. The imports span the period September 2012 to May 2013. The present litigation commenced with the show cause notice issued on 30.09.2013. The department alleges that no statement of accounts has been maintained for the receipt and consumption of coal for production of electricity. 4. Since the electricity generated had been both consumed in the factory at Sankar Nagar as well as wheeled out to the sister units, the respondents alleged contravention of Rule 6(1), 6(2) and 6(3) of the CENVAT Credit Rules, 2002 ('CCR'), proposing the demand of duty, interest and penalty. The specific allegati....
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....6 46,38,324/- 4/2016 dated 12.05.2016 R-67/2016 dated 14.07.2016 COMMON Order TNLCEX-000-APP-36 & 37/2017 dtd 21.04.2017 E/4146 4/2017 40868/2018 dated 13.03.2018 913/2018 E/4146 5/2017 40869/2018 dated 13.03.2018 914/2018 8. Consequent on the SCN dated 30.09.2013 and response filed, an order in original came to be passed on 08.12.2014 and the issues framed by the authority were as follows: "4.2...... 1. Whether ICL is entitled for the full credit of duty on inputs and input services used for generation of electricity at their CPP, while a substantial portion of the electricity so generated is wheeled out to the grid of TANGEDCO for distribution to and drawal by their other units at Salem, Dalavoi and Chennai?; 2. Whether ICL, is liable to pay an amount equal to 6% of the value of electricity wheeled out to the grid of TANGEDCO in terms of rule 6(3)(i) of CCR?"2 9. After a detailed consideration of the matter, the proposals under the show cause notice were confirmed as were the demands of duty, interest and penalty. Parallel with these proceedings, the appellant had sought refund of the credit reversed for the periods (i) September 2012 to May 2013 (ii) June 2013 ....
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....ory provisions and Rules. The definition of 'input' under Rule 2(g) of the CCR 2002 and 2004 contained a clear mandate that inputs must be consumed within the factory of production/generation and reads as follows:- "Rule 2 Definitions.- In these rules, unless the context otherwise requires,- ...... (g) "input" means all goods, except [light diesel oil] (inserted by M.F. & C.A. (D.R) Notification No. 13/2003-C.E.(N.T.), dated 1-3-2003.) high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production." 17. The above definition is what had come up for consideration in the case of Maruti Suzuki Ltd.(supra), referred to in extenso by both parties. The definition contains three parts, as amplified by the Bench in....
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....the grant of CENVAT credit. 24. The stand is restricted to the availment of credit by the principal unit only that is located proximate to the location of the CPP. 25. Paragraphs 19 and 20 of the judgment read as follows:- "19. The question which still remains to be answered is: whether an assessee would be entitled to claim CENVAT credit in cases where it sells electricity outside the factory to the joint ventures, vendors or gives it to the grid for distribution? In the case of Collector of Central Excise v. Rajasthan State Chemical Works reported in 1991 (55) ELT 444 (SC) the test laid down by this Court is whether the process and the use are integrally connected. As stated above, electricity generation is more of a process having its own economics. Applying the said test, we hold that when the electricity generation is a captive arrangement and the requirement is for carrying out the manufacturing activity, the electricity generation also forms part of the manufacturing activity and the "input" used in that electricity generation is an "input used in the manufacture" of final product. However, to the extent the excess electricity is cleared to the grid for distribution or t....
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....ption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price. " 26. While the appellant would argue that judgment in Maruti Suzuki Ltd. (supra) did not involve the question that arises in this case, the respondents would maintain that it was on point. They specifically draw attention to the paragraphs set out above to support their argument that the final product must be consumed in the original location where input had been consumed. 27. The narration of facts as captured in paragraphs 1 and 7 of the judgment in Maruti Suzuki is to the effect that the supply of electricity in that case was to sister concerns, vendors and third parties, and at cost. Thus, the Court was concerned with the factual scenario where the power was sold to other units and whether, in such circumstances, such sale would qualify for the claim of CENVAT credit. 28. In the present case, the electricity has not been sold but has been supplied though wheeling by TANGEDCO to sister units located elsewhere. All units are engaged in manufacture/grinding of cement and form part of the sam....