2009 (9) TMI 851 - AT - Central Excise

CENVAT Credit - capital goods - equipment for co-generation plant - credit for the period 10/2000 to 12/2002 - sugar mill had become functional on 21-1-04 - Held that - The co-generation plant became operational ahead of the sugar mill and during the period 1/2003 to 20-1-04, entire power generated was supplied to APTRANSCO. However, as per the PPA, SSAPL were to supply mutually agreed quantities of power to APTRANSCO and consume 0.20 MW to 3.2 MW captively. The assessee set out to set up the sugar factory with a captive co-generation plant and procured capital goods for the purpose and took credit of duty paid on them. The assessee cannot be denied credit on the ground that co-generation plant produced non-dutiable electricity and electricity was the final product at the time of receipt of equipment required to set up the power plant. On erection of the entire facility, dutiable excisable goods were the final products manufactured using, inter alia, electricity produced by the co-generation plant. It is immaterial that owing to delay in receiving certain approvals required, the sugar mill became fully operational in January, 2004 whereas the co-generation plant was operational a year earlier. The appellants eligible for the impugned credit - appeal allowed - decided in favor of appellant.

Summary

The Appellate Tribunal CESTAT Bangalore, consisting of Shri M.V. Ravindran and P. Karthikeyan, JJ., heard an appeal from M/s defe Sagar Sugars & Allied Products Ltd (SSAPL) regarding the entitlement of capital goods credit. SSAPL, a sugar manufacturer, procured capital goods for setting up a co-generation plant. The Commissioner (Appeals) imposed penalties on SSAPL for irregularly availing credit on the capital goods. The impugned order was based on sub-rule (4) of Rule 6 of Cenvat Credit Rules. The Tribunal found that the co-generation plant became operational before the sugar mill, and SSAPL supplied power to APTRANSCO as per a power purchase agreement. The Tribunal considered various case laws and held that SSAPL was entitled to the credit as the capital goods were intended for the production of dutiable excisable goods. The impugned order was vacated, and the appeal was allowed on 25-9-2009.