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2014 (9) TMI 716 - HC - Central ExciseCenvat credit 100% EOU - furnace oil used in production of steam/power supplied to 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 - definition of factory under Section 2(e) of the Central Excise Act, 1944 and Inputs under Rule 2(k), factory includes more than one premises - To be eligible for CENVAT Credit, an assessee has to use the input in the manufacture of dutiable goods in his factory. If the factory includes more than one unit and if the assessee uses this input in the manufacturing of excisable goods in both the units, he would be entitled to CENVAT Credit. The term within the factory of production used in Rule 2(k) cannot be confined to a single unit - If the assessee owns more than one unit, all the units if they are situated at a place would constitute a factory . The electricity or steam generated within the factory of production means within the factory premises which may include more than one unit. If such electricity or steam generated within the factory of production is utilized by the assessee in more than one unit and if those units are manufacturing excisable goods, then, the assessee would be entitled to the benefit of CENVAT credit to the entire extent of utilization of such electricity or steam in all the units of its factory premises. Therefore, whatever goes into generation of electricity or steam which is placed within the factory which may consists of more than one unit would be an input for the purposes of obtaining credit on the duty payable thereon - Decided against Revenue.
Issues Involved:
1. Entitlement to CENVAT Credit for furnace oil used in generating steam/electricity for use in another unit within the same compound. 2. Interpretation of the definition of "input" and "factory" under the CENVAT Credit Rules and Central Excise Act. 3. Obligation to maintain separate accounts for inputs used in the manufacture of dutiable and exempted goods. Issue-Wise Detailed Analysis: 1. Entitlement to CENVAT Credit for furnace oil used in generating steam/electricity for use in another unit within the same compound: The Revenue challenged the Tribunal's order confirming the proportionate CENVAT Credit availed by the assessee for furnace oil used in generating steam/electricity supplied to an Export Oriented Unit (EOU) within the same compound. The Revenue argued that the assessee did not reverse the proportionate CENVAT Credit as required by Rule 57 AD (2) of Central Excise Rules 1944 and Rules 6(2) & (3) of CENVAT Credit Rules 2001/2002/2004. The Tribunal, relying on precedents, treated the units within the same compound as a single factory, thus allowing the CENVAT Credit. 2. Interpretation of the definition of "input" and "factory" under the CENVAT Credit Rules and Central Excise Act: The court examined the definitions of "input" and "factory" under the CENVAT Credit Rules, 2004, and the Central Excise Act. "Input" includes goods used for generating electricity or steam within the factory of production. The term "factory" is defined inclusively to mean any premises where excisable goods are manufactured. The court noted that the definition of "factory" could include more than one premises, implying that multiple units within the same compound could be considered a single factory. 3. Obligation to maintain separate accounts for inputs used in the manufacture of dutiable and exempted goods: Rule 6 of the CENVAT Credit Rules, 2004, mandates that CENVAT Credit shall not be allowed on inputs used in the manufacture of exempted goods unless separate accounts are maintained. The court observed that the assessee is entitled to CENVAT Credit on inputs used in the manufacture of dutiable goods within the factory. Since the factory can include multiple units within the same premises, the steam generated and used in both units qualifies for CENVAT Credit. Conclusion: The court concluded that the assessee's factory, comprising two units within the same premises, qualifies as a single factory under the Central Excise Act. Therefore, the assessee is entitled to CENVAT Credit for the entire volume of steam used in manufacturing excisable goods in both units. The appellate authorities' orders granting relief to the assessee were upheld, and the Revenue's appeal was dismissed.
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