2014 (7) TMI 1073 - AT - Central Excise

Reversal of cenvat credit - furnace oil used to generate electricity - supply of electricity to another 100% EOU - it is argued that goods supplied to the 100% EOU cannot be treated as exempted goods for denying CENVAT Credit by virtue of Rule 6(6)(ii) of the CENVAT Credit Rules, 2004 - Held that - The issue involved in this appeal has already been decided in favour of the assessees by this very Bench in the case of Sanghi Industries Ltd Vs CCE Rajkot (2014 (2) TMI 278 - CESTAT AHMEDABAD) - supplies made to a 100% EOU cannot be considered as exempted goods - Decided in favor of assessee.

Summary

Issues Involved:
1. Admissibility of CENVAT Credit for inputs used in generating electricity and steam supplied to a sister concern and corporate office.
2. Whether the corporate office is situated within the registered premises of the appellant.
3. Applicability of extended period for demand due to conflicting judicial interpretations.

Detailed Analysis:

1. Admissibility of CENVAT Credit:
The appellant held a Central Excise Registration for manufacturing excisable goods and had a captive power plant using cenvatable inputs like furnace oil to generate electricity and steam. Part of this electricity and steam was supplied to its sister concern (a 100% EOU) and corporate office. The adjudicating authority demanded reversal of proportionate CENVAT Credit attributable to the furnace oil used for electricity supplied to the sister concern and corporate office, as per Rule 6(3)(a)(iv) of the CCR, 2004. The appellant argued that the sister concern has no independent legal identity and goods supplied to it cannot be treated as exempted goods under Rule 6(6)(ii) of the CENVAT Credit Rules, 2004. They cited several judgments supporting their claim that CENVAT Credit of inputs used for generating electricity and steam supplied to sister concerns and corporate offices is admissible.

2. Corporate Office Location:
The appellant contended that their corporate office is within the registered premises as per the site plan submitted during registration, and it is involved in manufacturing and business activities. The Tribunal observed that the corporate office is indeed within the registered premises, and this issue had been previously decided in favor of the assessee in similar cases.

3. Applicability of Extended Period:
The appellant argued that the demand was time-barred due to conflicting judicial views on the issue during the relevant period. The Tribunal noted that the issue of admissibility of such credit was under litigation with varying interpretations from different courts. Hence, the extended period for demand was not applicable.

Judgment:
The Tribunal allowed the appeal, holding that:
- The appellant correctly availed CENVAT Credit for inputs used in generating electricity and steam supplied to its sister concern and corporate office.
- The corporate office is within the registered premises.
- The extended period for demand is not invokable due to conflicting judicial interpretations.

The Tribunal emphasized that procedural lapses should not deny substantial benefits of CENVAT Credit when inputs are used for manufacturing goods on which duty is payable. The Tribunal also noted that supplies to a 100% EOU cannot be considered as exempted goods, supporting the appellant's claim. The appeal was allowed, and the demand set aside.