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2011 (2) TMI 990 - AT - Central ExciseCenvat credit - Appellant has used furnace oil and fuel in the power plant installed for generation of electricity - A part of the electricity generated has been diverted to the plastic division of the appellant, which is situated in adjoining factory and take the credit on it - The appellant reversed the proportionate credit in respect of furnace oil used for generation of electricity supplied to plastic division & thereafter refund claims were filed in respect of the cenvat credit reversed under protest - refund claim rejected - Held that - As relying upon the case of M/s. Maruti Suzuki Ltd. Vs. CCE Delhi 2009 (8) TMI 14 - SUPREME COURT laying down that an assessee is entitled to credit on the eligible inputs utilised in the generation of electricity to the extent to which they are using the produced electricity within their factory - They are not entitled to the credit to the extent of excess electricity cleared outside the factory - The Tribunal, while rejecting the appeal of the appellant, however set aside the penalty imposed upon them by observing that the matter was not free from doubt - Decided against the assessee.
Issues:
1. Reversal of cenvat credit for electricity generation. 2. Rejection of refund claims by the original adjudicating authority. 3. Interpretation of the Supreme Court judgment in M/s. Maruti Suzuki Ltd. Vs. CCE Delhi. 4. Consideration of penalty imposition in the appeals. Issue 1: Reversal of cenvat credit for electricity generation The appellant installed a power plant for electricity generation using furnace oil and fuel, availing cenvat credit. A portion of the electricity produced was diverted to the plastic division of the appellant's factory. The appellant reversed the proportionate credit for the period from January 2006 to July 2007 in respect of furnace oil used for electricity supplied to the plastic division. Issue 2: Rejection of refund claims The original adjudicating authority rejected the refund claims filed by the appellant for Rs.42,36,946/- and Rs.44,22,084/- in relation to the reversed cenvat credit. The Commissioner (Appeals) upheld this decision, citing the Supreme Court's judgment in M/s. Maruti Suzuki Ltd. Vs. CCE Delhi, which clarified the eligibility of credit for inputs used in electricity generation. Issue 3: Interpretation of Supreme Court judgment The appellate authority, relying on the Supreme Court's decision in M/s. Maruti Suzuki Ltd., emphasized that an assessee is entitled to credit for eligible inputs used in electricity generation only to the extent of electricity consumed within their factory. The Tribunal's majority decision in Arvind Mills Ltd. Vs. CCE Ahmedabad was also considered, although it was overturned by the Supreme Court. Issue 4: Penalty imposition consideration The appellant's advocate acknowledged a previous Tribunal decision against the appellant, which was rejected based on the Maruti Suzuki Ltd. case. The Tribunal in the current case rejected the appeals, noting the absence of penalties. The rejection was based on the consistent legal precedents and the lack of new arguments or evidence presented by the appellant. This judgment highlights the importance of consistent legal interpretations and adherence to established precedents in tax matters. The decision underscores the limitations on cenvat credit for inputs used in electricity generation when a portion of the electricity is supplied outside the factory premises. The rejection of the refund claims emphasizes the need for taxpayers to align their practices with prevailing legal principles and judicial decisions. The acknowledgment of previous Tribunal decisions and Supreme Court judgments demonstrates the significance of legal precedent in shaping tax disputes and decisions.
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