2012 (9) TMI 379 - AT - Central Excise

Cenvat credit 100% EOU - whether a number of different plants manufacturing different excisable goods in the same premises would constitute one factory and the separate registration would not mean that they are different factories Held that - Factories are situated in the same compound are to be treated as one - 100% EOU to whom the electricity generated was supplied is located within the same compound and therefore credit is admissible.

Summary

Issues:
1. Appeal against decision allowing proportionate cenvat credit availed in respect of furnace oil used in production of steam/power supplied to EOU belonging to the same company.
2. Interpretation of Rule 6(6) of Cenvat Credit Rules, 2004 regarding credit utilization when inputs are used outside the factory.
3. Determination of whether different plants in the same premises constitute one factory for the purpose of availing credit.
4. Application of the decision in the case of Dhampur Sugar Mills Ltd. v. CCE regarding the treatment of units in the same compound as a single factory.

Analysis:
1. The Revenue appealed against the decision of the Commissioner (Appeals) allowing proportionate cenvat credit for furnace oil used in production of steam/power supplied to EOU. The Revenue contended that credit is not admissible when inputs are used outside the factory, citing rulings such as Vikram Cement v. CCE and Maruti Suzuki Ltd. v. CCE. However, the respondent argued that as per Rule 6(6) of CCR, when excisable goods are supplied to a 100% EOU, the provisions of certain sub-rules do not apply, making the credit admissible. The Tribunal, after considering submissions, upheld the Commissioner's decision, stating that units in the same compound are to be treated as a single factory, thus allowing the credit.

2. The crux of the dispute was whether the inputs were used within the factory, as required for credit eligibility. The Tribunal noted that although this aspect was not explicitly raised in the show-cause notice, the Commissioner had considered it, and since the respondents did not appeal against his decision, it was a relevant factor. Citing the precedent of Dhampur Sugar Mills Ltd. case, where the Apex Court upheld treating units in the same compound as one factory, the Tribunal concluded that the credit was admissible, rejecting the Revenue's argument that the inputs were not used within the factory due to supplying electricity to another factory.

3. The respondent's advocate highlighted the provisions of Rule 6(6) of CCR, emphasizing that when excisable goods are supplied to a 100% EOU, certain sub-rules do not apply, supporting the admissibility of credit. Additionally, referencing the Dhampur Sugar Mills Ltd. case, it was argued that units in the same compound should be considered as a single factory. The Tribunal agreed with this interpretation, aligning with the decision of the Apex Court in favor of treating such units as one factory, thereby allowing the credit in question.

4. Ultimately, the Tribunal rejected the Revenue's appeal, emphasizing that the units in the same compound should be treated as a single factory based on the precedent set by the Dhampur Sugar Mills Ltd. case. As the Commissioner had already considered and decided on the issue of inputs being used within the factory, and the respondents did not challenge this decision, the Tribunal upheld the admissibility of the cenvat credit, in line with the interpretation of Rule 6(6) of CCR and the treatment of units in the same compound as a single factory.