2007 (11) TMI 594 - AT - Central Excise

Summary

Issues involved: Appeal against duty demand and penalty imposed on denial of Cenvat credit for using surplus electricity generated in a different unit.

Summary:

Issue 1: Denial of Cenvat credit on fuel oil for generating electricity used in different units

The appellant had units in Amreli, Hazira, and Magdalla in Gujarat, using Naptha and furnace oil to generate electricity. The original authority disallowed the credit on fuel oil as part of the electricity was used outside the factory of production. The Commissioner (Appeals) upheld the duty demand but reduced the penalty. The appellant argued that the use of surplus electricity in other units should not lead to the denial of Cenvat credit, citing precedents like SRF Ltd. v. CCE and Arvind Mills Ltd. v. CCE. The Tribunal agreed, emphasizing that inputs must be used within the factory of generation where credit was taken, and using surplus electricity in other units of the same company or its subsidiary should not result in credit denial.

Decision:
The appeal was allowed, granting consequential relief to the appellant.