2015 (2) TMI 515 - AT - Central Excise

Denial of Cenvat Credit - generation of electricity in captive power plant - electricity was sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. and some electricity was cleared to their sister unit. - Held that - Considering the fact that the electricity which was cleared by M/s. Ajmer Vidyut Vitran Nigam Ltd. the appellant is not entitled to take Cenvat Credit on inputs which are attributable to the electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. Therefore, appellants are required to reverse the amount of inputs used in generation of electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. Further, I find that the electricity which was transferred to their sister unit for manufacturing of final product, the appellant is entitled to take Cenvat Credit as held by this Tribunal in their own case. As the fact of clearance of electricity to M/s. Ajmer Vidyut Vitran Nigam Ltd. came to the knowledge during the course of investigation otherwise the appellant would not have reversed the said credit and the same fact has not been brought in the knowledge of the department. Therefore, appellant is liable to be penalised on that account - Decided against assessee.

Summary

Issues: Denial of Cenvat Credit on inputs used in generation of electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd.; Entitlement to Cenvat Credit for electricity transferred to sister unit; Imposition of penalty.

In the judgment delivered by Hon'ble Mr. Ashok Jindal, the appellant appealed against the denial of Cenvat Credit on inputs used in generating electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. The lower authorities had denied the credit on the premise that some electricity was sold to the mentioned entity. The Tribunal ruled that the appellant is not entitled to take Cenvat Credit on inputs attributable to the electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. However, the appellant was allowed to take Cenvat Credit for the electricity transferred to their sister unit for manufacturing final products. This decision was based on a previous ruling by the Tribunal in the appellant's own case. The Tribunal noted that the appellant had reversed the credit upon discovering the clearance of electricity to M/s. Ajmer Vidyut Vitran Nigam Ltd. during an investigation, without informing the department. Consequently, a penalty of Rs. 4000 was imposed on the appellant for this non-disclosure.

In conclusion, the Tribunal confirmed the denial of Cenvat Credit on inputs related to electricity sold to M/s. Ajmer Vidyut Vitran Nigam Ltd. and upheld the penalty of Rs. 4000. The appeal was disposed of with these terms. The judgment highlights the importance of compliance with disclosure requirements and the differentiation in Cenvat Credit entitlement based on the destination of the electricity generated.