2014 (6) TMI 649 - AT - Central Excise

Cenvat credit of duty paid on raw materials, capital goods and input services utilised in the captive power plant. - Benefit of Section 80-I of the Income-tax claimed - revenue contended that, the same cannot be held to be a part of the appellant s factory for the purpose of excise - Held that - appellant s claim of captive power plant being a new industrial undertaking before the Income-tax authorities was held as not against the appellants claim of the same being a captive power plant before the Excise authorities for the purpose of Cenvat credit. Further the Tribunal in the case of Sangam Spinners v. CCE, Jaipur 2006 (9) TMI 28 - CESTAT,NEW DELHI held that captive power plant was held to be a part of the factory even when the same was taken up as a separate division by the appellant in their balance sheet - Decided in favour of assessee.

Summary

Issues:
- Availment of Cenvat credit on raw materials, capital goods, and input services for captive power plant.
- Dispute regarding treating captive power plant as part of the factory for excise purposes.
- Commissioner's observation on Tribunal's decision and the Revenue's appeal.
- Applicability of the doctrine of election in the case.

Analysis:
1. The appeals involved the availment of Cenvat credit on inputs/raw materials used in a captive power plant by M/s. C. Denim engaged in textile manufacturing. The electricity generated from the captive power plant was used for manufacturing goods in the factory, with a proportionate credit reversal for electricity diverted to a sister unit.

2. The dispute centered around whether the captive power plant should be considered part of the factory for excise purposes. The lower authorities denied Cenvat credit, citing the appellant's claim under Section 80-I of the Income-tax Act, treating the power plant as a new industrial undertaking.

3. The Commissioner's observation on a Tribunal decision regarding different plants in the same premises constituting one factory raised concerns. The Tribunal's decision in similar cases, like Reliance Industries Ltd. v. CCE, supported the appellant's claim of the power plant being separate for tax and excise purposes.

4. The Tribunal criticized the Commissioner's comments on its decision, emphasizing that the Revenue should have appealed if aggrieved. Precedent cases, such as Sangam Spinners v. CCE, affirmed the captive power plant's integration with the factory for Cenvat credit purposes.

5. The Joint CDR referenced a Supreme Court decision on the doctrine of election, arguing against inconsistent claims. However, the Tribunal found this reference inapplicable to the case, as it pertained to different circumstances.

6. Ultimately, the Tribunal set aside the lower orders, allowing the appeals and granting relief to the appellants. The judgment emphasized the integration of the captive power plant with the factory for Cenvat credit purposes, disregarding the Commissioner's objections and emphasizing consistency in legal positions.