2007 (10) TMI 111 - AT - Central Excise

Tribunal denied credit on fuel used in generation of electricity which is further not used in relation to manufacture of final product No mistake in order of Tribunal so application for ROM is rejected as it will be eligible for credit only if used in or in relation to manufacture of final good

Summary

Issues:
1. Rectification of mistake apparent from record regarding admissibility of credit for fuel used in the canteen.
2. Interpretation of previous Tribunal decisions on Cenvat credit for fuel used in exempted goods.
3. Applicability of SAIL Ltd. decision on office and township location within factory premises.
4. Relevance of Rule 6 of Cenvat Credit Rules, 2002 on maintaining separate records for fuel used in manufacture.
5. Interpretation of Rule 57B(iv) of Central Excise Rules, 1944 on credit for inputs used in electricity generation for residential complexes.

Analysis:
1. The Tribunal initially held that credit for fuel used in the canteen was not admissible as it was not directly related to the manufacturing process. This decision was based on the SAIL Ltd. case.
2. The applicant argued that recent Tribunal and High Court decisions allowed Cenvat credit for fuel used in the factory premises, irrespective of the end use. Cases like Gujarat Narmada Fertilizers Co. Ltd., Raymonds India Ltd., Ferro Alloys Corporation Ltd., and HEG Ltd. supported this view.
3. The applicant contended that the SAIL Ltd. decision was not applicable to their case as it did not consider the office and township within the factory premises. They sought rectification based on this argument.
4. The Tribunal clarified that previous decisions were related to Rule 6 of Cenvat Credit Rules, 2002, which exempted the need for separate records for fuel used in both dutiable and exempted products. The Gujarat High Court also emphasized the lack of requirement for separate accounts under Rule 57AB.
5. The Bombay High Court's decision in the Indorama Synthetics case highlighted the necessity for electricity usage to be directly connected to the manufacturing process for Cenvat credit eligibility. The court ruled that supplying electricity to residential complexes within the factory premises did not qualify for credit unless directly related to manufacturing activities.

In conclusion, the Tribunal rejected the rectification application based on the High Court's decision, affirming that Cenvat credit for electricity used in the factory premises is only eligible if directly linked to the manufacturing process. This judgment clarified the interpretation of relevant rules and previous decisions regarding the admissibility of credits for inputs used in manufacturing processes within factory premises.