2017 (7) TMI 934 - AT - Central Excise

Clearance of Sulphuric Acid to the captive power plant without payment of Central Excise duty or reversal of CENVAT credit - Non-payment of Central Excise duty was objected to by the Central Excise Department on the ground that the goods were supplied to a separate legal entity - Held that - in an entirely identical matter in the appellant s own case for the earlier period, in the case of M/s Steel Authority of India Ltd. Versus CCE, Raipur 2016 (3) TMI 153 - CESTAT NEW DELHI , this Tribunal has held that the power plant even after its transfer, remains part of the same factory, and thus, it cannot be said that any excisable goods is removed from the factory - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of Central Excise duty on transfer of goods to a separate legal entity.
2. Interpretation of factory premises and ownership transfer affecting Central Excise duty liability.

Analysis:
1. The case involved the appellant, engaged in manufacturing Iron and Steel goods, transferring Sulphuric Acid to a captive power plant without payment of Central Excise duty. The dispute arose regarding whether the transfer to a separate legal entity made the appellant liable for Central Excise duty. The appellant cited a previous Tribunal order in their favor.

2. The Revenue argued that the transfer of goods to another legal entity constituted removal outside the factory, triggering Central Excise duty liability. However, the Tribunal found that the power plant, even after transfer of ownership, remained an integral part of the factory. The Tribunal referred to Rule 4(5)(a) of Cenvat Credit Rules and a previous case law to support the appellant's position.

3. The Tribunal emphasized that the factory premises, as licensed under Central Excise provisions, remained unaffected by the transfer of ownership to the power plant. Since no separate Central Excise license was issued for the power plant, it was considered part of the appellant's factory. All inputs transferred to the power plant were utilized in generating electricity, which was then used by the appellant, reinforcing the integral connection between the entities.

4. Ultimately, the Tribunal concluded that the Revenue's stance was not sustainable, as the power plant was deemed part of the appellant's factory. Citing the settled position of law, the Tribunal set aside the impugned order and ruled in favor of the appellant, allowing the appeal with consequential relief.

This judgment clarifies the liability of Central Excise duty on goods transferred to a separate legal entity within the same factory premises and highlights the importance of ownership transfer and factory integration in determining Central Excise duty obligations.