TaxTMI 
TaxTMI 
2026 (6) TMI 894
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.... The appellant has been using furnace oil for manufacturing PTA as also for generation of electricity captively consumed within the factory premises. However, 132 KV Power Supply Line was commissioned and made operational in two phases beginning April, 2015 and June, 2015. Consequently, during the impugned period i.e., from May, 2015 to February, 2016, a major portion of furnace oil was used in the manufacture of final products and only a negligible quantity was used in generation of electricity. However, when information was sought from the appellant as regards consumption of furnace oil in electricity generation for the purposes of issuance of periodical Show Cause Notice by the Revenue, the appellant inadvertently proceeded on the basis of earlier methodology of proportionate allocation by overlooking the fact that electricity was pre-dominantly sourced from the grid. Therefore, the appellant had initially furnished incorrect information and actually, a very insignificant quantity of furnace oil was actually consumed for electricity generation during the period under dispute, in the view of grid supply. 4. A Show Cause Notice bearing No. V CH. 29(15)31/CE/HAL/Adjn/2016/5804 d....
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.... of such electricity is consumed in the factory office and canteen. Under Rule 2(k), a "whatsoever relationship" with manufacture is required. Since the canteen is a statutory requirement and both the office and canteen are integral to factory operations, the use of furnace oil cannot be said to be unconnected with manufacture and is, therefore, eligible for CENVAT credit. (iii) In this regard, it is submitted that the issue involved in the present case is squarely covered in favour of the appellant in its own case for both prior and subsequent periods. For the period July, 2014 to April, 2015, the Ld. Commissioner (Appeals), vide Order-in-Appeal No. 54/HAL/CE/2017-18 dated 16.11.2017, held that the appellant had rightly availed CENVAT credit on furnace oil used in generation of electricity in the captive power generation machine, notwithstanding that a part of such electricity was used in the factory office and canteen. Further, for the period February, 2016 to March, 2017, this Tribunal, vide Final Order No. 76487/2019 dated 01.11.2019, concurred with the views of the Ld. Commissioner (Appeals). (iv) In light of the above, and considering that the period involve....
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....on electricity used in the canteen and laundry within the factory premises. D. The present demand is itself unsustainable and, consequently, no interest is imposable upon the appellant (i) It is a well-settled principle of law that interest is merely accessory to the principal demand and, if the principal amount itself is not payable, the question of payment of interest does not arise. In view of the submissions made hereinabove, the denial of CENVAT credit as upheld in the impugned order is unsustainable and, consequently, the demand of interest is also liable to be set aside. 6.1. In view of the above submissions, the Ld. Counsel for the appellant prayed for setting aside the denial and recovery of CENVAT Credit to the tune of Rs.5,36,809/-, along with interest thereon, which has been upheld vide the impugned order. 7. On the other hand, the Ld. Authorized Representative of the Revenue supports the impugned order. Accordingly, it is his contention that the CENVAT Credit availed on furnace oil has been rightly denied to the appellant by way of the present proceedings. 8. Heard the parties and considered their submissions. 9. We find that the issue involved ....
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.... all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1.- The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2.- Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treatred bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods; Rule 2(k) of CENVAT Credit Rules, 2004 'input' w.e.f. 01.04.2011. Definition of "input" means- (i) all goods used in the factory by the manufacturer of the final product; or (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generat....
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....sed within the factory of production. Further, the terms 'factory means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured or process, connected to manufacturing, is carried out. Oxford Dictionary defines the terms 'precincts' as "the area within the walls or perceived boundaries of a particular building or place". Hence, the terms 'factory' includes all the facilities, including that of manufacturing process, within its boundary wall. Therefore, the above discussion unambiguously infers that, as was prior to 01.04.2011, CENVAT credit was available on goods used in generation of electricity and consumed within the boundary wall of the factory of production in or in relation to manufacture of final products, or for any other purpose which may not have direct relation to manufacture. This view was also ratified by the Hon'ble Supreme Court in the judgement in the case of Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi-III [2009 (240) E.L.T. 641 (S.C.)] wherein the Hon'ble Court has inter alia observed that assessee is entitled to credit on the eligib....