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2017 (2) TMI 715 - AT - Central ExciseCENVAT credit - captive consumption - merger of the units - whether the appellant is entitled to the Cenvat credit of duty paid on the inputs and input services utilized at their Captive Power Plant, which is located at Renusagar, almost 50 KM away from the factory? - The main ground for denial is that the power plant does not belong to appellant (Hindalco) and services availed by subsidiary company (Renusagar Power Plant) cannot be given credit to appellant. Held that - The Hon ble Delhi High Court approved the scheme of amalgamation which resulted in the merger of Hindalco Industries Limited and Renusagar Power Company Limited. As such there can be no dispute about the fact that power plant at Renusagar belonging to the appellant. Hence, the basis of Member (Technical)finding that the power plant belongs to subsidiary unit is factually incorrect. Hence, the reasoning followed is untenable. Credits of duty paid on services availed with reference to Renusagar Power Plant are rightly eligible to the appellant - Decision in the case of 1988 (7) TMI 367 - SUPREME COURT OF INDIA 1988 (7) TMI 367 - SUPREME COURT OF INDIA followed. - decided in favor of appellant.
Issues Involved:
1. Entitlement to Cenvat credit on inputs and input services utilized at a Captive Power Plant located 50 KM away from the factory. 2. Definition and interpretation of "captive power plant" in the context of Cenvat credit rules. 3. Applicability of previous judgments and legal precedents to the current case. 4. Consideration of the factual relationship between Hindalco Industries Limited and Renusagar Power Company Limited. Issue-wise Detailed Analysis: 1. Entitlement to Cenvat Credit on Inputs and Input Services: The primary issue revolves around whether the appellant is entitled to Cenvat credit for duty paid on inputs and input services used at their Captive Power Plant located at Renusagar, which is 50 KM away from the main manufacturing facility. The appellant argued that the power generated at Renusagar is exclusively supplied to their factory, thus constituting a captive power plant. The Tribunal referred to a previous decision in the appellant's own case (M/s Hindalco Industries Ltd. Vs. CCE, Allahabad, 07.05.2012), which established that the power plant is indeed a captive power plant, and therefore, the input services used there would entitle the appellant to claim Cenvat credit. 2. Definition and Interpretation of "Captive Power Plant": The term "captive power plant" is not explicitly defined in the Cenvat Credit Rules. However, the Tribunal borrowed the definition from Section 2(8) of the Electricity Act, 2003, which describes a captive generating plant as one set up primarily for the owner's use. The Tribunal concluded that since the power generated by Renusagar Power Plant is exclusively supplied to the appellant's factory, it qualifies as a captive power plant. This interpretation was supported by the Supreme Court's judgment in Vikram Cement vs. CCE, Indore, which held that if a captive mine constitutes one integrated unit with the concerned factory, Modvat/Cenvat credit on capital goods is available. 3. Applicability of Previous Judgments and Legal Precedents: The Tribunal's decision heavily relied on previous judgments, particularly the Supreme Court's ruling in Vikram Cement and the Tribunal's own earlier decision in the appellant's case. The Member (Judicial) emphasized that since the issue had already been settled in favor of the appellant in the previous order, the same rationale should apply here. However, the Member (Technical) raised concerns about factual discrepancies and the need to revisit the issue, citing the Supreme Court's caution against applying precedents without considering the specific facts of each case (CCE v. Fiat India Limited, 2012). 4. Consideration of the Factual Relationship Between Hindalco Industries Limited and Renusagar Power Company Limited: The Member (Technical) argued that Hindalco and Renusagar are distinct legal entities, with Renusagar being a subsidiary of Hindalco. He contended that the Cenvat Credit Rules do not allow credit for services availed by a subsidiary company to be claimed by the holding company. He also noted that the power plant is located 50 KM away from the factory, challenging the notion of an integrated unit. Conversely, the Member (Judicial) and the Third Member (B. Ravichandran) pointed out that, following a merger approved by the Bombay High Court, Renusagar is now part of Hindalco, making the power plant a division of Hindalco and not a separate entity. This factual correction was crucial in determining the eligibility for Cenvat credit. Final Decision: The Third Member (B. Ravichandran) concluded that the power plant at Renusagar is indeed part of Hindalco following the merger, and thus, the appellant is entitled to Cenvat credit for input services used at the power plant. This decision was based on the factual correction and the legal precedents supporting the appellant's claim. Consequently, the appeals were allowed, and the impugned orders were set aside, granting consequential relief to the appellant.
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