2010 (11) TMI 416 - AT - Central Excise

Waiver of pre- deposit - Factory under Section 3(6) of the Factories Act, 1995 - Cenvat creit on capital goods - Captive power plants - Merely because, an assessee, in order to claim the benefit under Income Tax Act, has claimed the power plant to be an undertaking, that itself cannot be sufficient to arrive at a conclusion that the same has to be an independent factory - There is no dispute that the capital goods were found in the factory premises of the appellants - There is also no dispute that the captive power plants are also situated within the same factory premises though with a different name and style of Century Denim Power Plant - Prima facie case has been made out for grant of stay of the impugned order without insisting for pre-deposit for the purpose of hearing of the appeals - Decided in favour of assessee.

Summary

Issues involved:
Claim of cenvat credit denial based on definition of "Factory" under Factories Act and Income Tax Act, Prima facie analysis of the impugned order.

Analysis:
The judgment revolves around the denial of cenvat credit amounting to Rs. 10,26,89,238/- and imposition of an equal penalty by the Commissioner, Indore. The denial was based on the interpretation of the word "Factory" under Section 3(6) of the Factories Act, 1995, and Section 80-IA of the Income Tax Act, 1961. The Commissioner considered the Century Denim Power Plant established by the appellants within their factory premises as an independent and separate factory due to its captive electricity usage and the benefit claimed under the Income Tax Act, specifically under Section 80IA. However, the Tribunal found the Commissioner's decision lacking a proper analysis of the evidence and application of the relevant laws to the case. The Tribunal highlighted that just because the appellants claimed the power plant as an undertaking for tax benefits does not automatically make it an independent factory.

The Tribunal noted that there was no dispute regarding the presence of capital goods within the factory premises of the appellants, including the captive power plants under the name of Century Denim Power Plant. Importantly, there was no evidence to suggest that the power plant was a separate legal entity. Therefore, the Tribunal concluded that a prima facie case existed for granting a stay on the impugned order without requiring a pre-deposit for the appeal hearing. Consequently, the Tribunal allowed the application, stayed the impugned order, and waived the demanded amount until the appeal's disposal.

Additionally, considering the substantial amount involved (Rs. 10 crores and above) and at the request of the DR, the Tribunal directed the appeal to be expedited for an early hearing. The registry was instructed to schedule the appeal for final hearing on 17-3-2011. This decision aimed to address the significant financial implications of the case promptly while ensuring a fair and efficient resolution through a timely hearing.