2017 (4) TMI 841 - AT - Central Excise

CENVAT credit - power generated and transferred to their sister concern - It is the case of the Revenue that the input services are not used in respect of the power which is generated and captively consumed - Held that - in an identical issue in respect of very same assessee but situated at Chittorgarh, Rajasthan, in the case of M/s Hindustan Zinc Limited Versus CCE & ST, Jaipur - II 2016 (6) TMI 402 - CESTAT NEW DELHI it was held that the electricity has been used in the manufacture of dutiable final products and also the fact that all units belong to the appellant the denial of credit is not justifiable - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Availment of Cenvat Credit on input services used in power generation and transferred to sister concern.

Analysis:
1. The appellant availed Cenvat Credit on common inputs and input services used in the captive power plant, generating power for captive use, transfer to sister concern, and sale to Electricity Board. The objection was raised during audit regarding Cenvat Credit on input services proportionate to power sold and transferred. Appellant accepted liability for input services used for electricity sold to Electricity Board but contested for power transferred to sister concern.

2. The appellant argued that Cenvat Credit for input services used in power generation and transferred to sister concern is admissible as they were used in manufacturing dutiable final products by both appellant and sister concern. The appellant cited precedents and contended that there was no legal requirement for input services to be directly related to final product manufacturing within factory premises during the relevant period.

3. The Revenue, represented by the DR, supported the lower authorities' findings denying Cenvat Credit to the appellant for power generated and transferred to the sister concern.

4. The Tribunal analyzed the issue and referred to a previous decision on an identical issue involving the same appellant in a different location. The Tribunal held that Cenvat Credit on input services used in power generation is eligible as long as electricity is used in manufacturing dutiable final products. The Tribunal found the denial of credit unjustifiable, especially considering the interconnection between units of the same appellant.

5. Relying on the precedent and reasoning provided, the Tribunal set aside the impugned order, allowing the appeals and concluding that the denial of Cenvat Credit on input services used in power generation and transferred to the sister concern was unsustainable.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, precedents, and the final decision by the Tribunal regarding the availment of Cenvat Credit on input services used in power generation and transferred to a sister concern.