2017 (11) TMI 1643 - AT - Central Excise

CENVAT credit - separate units - case of Revenue is that, as the boiler unit and the manufacturing units are two separate units having two separate registrations, therefore, inputs received in the boiler unit are not entitled for Cenvat credit to the respondent - Held that - Admittedly in this case, the whole of the coal which has been used for boiler for generation of steam and such generated steam has been used by the respondent 100% through pipelines - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against Cenvat credit entitlement for inputs used in separate units.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad involved a dispute regarding the entitlement of Cenvat credit for inputs used in separate units of the respondent. The respondent had two units, one with a manufacturing unit and the other with a boiler that received coal for generating steam used by the respondent through a pipeline. The Revenue contended that since the units had separate registrations, the inputs received in the boiler unit were not eligible for Cenvat credit. The Commissioner (Appeals) allowed the credit, emphasizing the integrated use of coal for steam generation. The Revenue challenged this decision citing a precedent from the Hon'ble Gujarat High Court.

Upon hearing the arguments and reviewing the case, the Tribunal noted that the precedent cited by the Revenue involved a different scenario where electricity generated was partly sold to another unit. In contrast, in the present case, the coal was entirely used for steam generation, and the steam was wholly utilized by the respondent through pipelines. The Tribunal concluded that the facts of the precedent were not applicable to the current case due to the distinct usage patterns of the inputs and outputs.

Consequently, the Tribunal found no merit in the Revenue's appeal and upheld the decision of the Commissioner (Appeals) to allow the Cenvat credit to the respondent. The appeal was dismissed, affirming the impugned order. The judgment clarified the distinction in usage scenarios between the precedent case and the current matter, emphasizing the integral use of inputs for steam generation and consumption by the respondent, leading to the dismissal of the Revenue's appeal.