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2013 (6) TMI 178 - HC - Central ExciseCenvat Credit on inputs, viz. furnace oil, used as fuel for the generation of electricity - captive consumption - reversal of credit - Rule 6 - held that - Tribunal below rightly applied the above decision of the Supreme Court in the case of Maruti Suzuki Ltd. 2009 (8) TMI 14 - SUPREME COURT to the facts of the present case as the assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which it is using the produced electricity within its factory which is registered for that purpose but not to the extent supplied to a factory which is registered for a different unit. The factory of the Plastic Division of the appellant cannot be said to be the factory of the present unit which is registered separately from that unit. - Decided against the assessee.
Issues Involved:
1. Entitlement to Cenvat credit on inputs used for electricity generation supplied to another division. 2. Definition and interpretation of "factory" under Central Excise Act. 3. Validity of separate registration of different units under Central Excise Rules. 4. Application of the Supreme Court decision in Maruti Suzuki Ltd. v. CCE, Delhi-III. Detailed Analysis: 1. Entitlement to Cenvat credit on inputs used for electricity generation supplied to another division: The appellant, a company with two divisions (Textile and Plastic), installed DG sets for uninterrupted electricity supply, using furnace oil as fuel. The appellant availed Cenvat credit on furnace oil used for generating electricity, which was partly supplied to its Plastic Division. The Central Excise authorities required the appellant to reverse the credit taken on furnace oil used for electricity supplied to the Plastic Division. The appellant reversed the credit under protest and later filed for a refund, which was rejected by the authorities. The Tribunal upheld the rejection, leading to the present appeals. The appellant argued that the electricity supplied to its Plastic Division should be considered as used within its factory, thus entitling it to Cenvat credit. 2. Definition and interpretation of "factory" under Central Excise Act: The appellant contended that both divisions, being located within a common boundary wall, should be considered a single factory under Section 2(e) of the Central Excise Act. The appellant argued that separate central excise registration does not make them separate factories. The Tribunal, however, held that the appellant's separate registration of the Plastic Division under Rule 9 of the Central Excise Rules indicated that they are distinct entities. The Tribunal concluded that the electricity supplied to the Plastic Division could not be considered as used within the same factory. 3. Validity of separate registration of different units under Central Excise Rules: The Tribunal emphasized that the appellant had registered the Plastic Division separately under Rule 9 of the Central Excise Rules, 2002, which mandates separate licenses for different places of business. The appellant's separate registration of the Plastic Division estopped it from claiming that it was part of the same factory. The Tribunal noted that separate registration implies separate entities, regardless of their physical proximity within a common boundary wall. 4. Application of the Supreme Court decision in Maruti Suzuki Ltd. v. CCE, Delhi-III: The Tribunal applied the Supreme Court's decision in Maruti Suzuki Ltd. v. CCE, Delhi-III, which held that inputs used for generating electricity are eligible for Cenvat credit only if the electricity is used within the factory of production. Since the appellant supplied part of the electricity to its separately registered Plastic Division, the Tribunal concluded that the appellant was not entitled to Cenvat credit for the inputs used to generate that electricity. The Tribunal found that the appellant's case was analogous to Maruti Suzuki, where excess electricity supplied outside the factory was not eligible for Cenvat credit. Conclusion: The Tribunal affirmed the authorities' decision, holding that the appellant was not entitled to Cenvat credit for inputs used to generate electricity supplied to its separately registered Plastic Division. The appeals were dismissed, upholding the interpretation that separate registration under the Central Excise Rules signifies distinct entities, and thus, the electricity supplied to the Plastic Division could not be considered as used within the same factory.
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