2018 (11) TMI 1367 - AT - Central Excise

CENVAT Credit - TMT Bars/Rods/Angles falling under Chapter 72 and 73 which are used in the power generation Co-Gen plant set up by the appellants in their factory - Held that - The part of the power generated is utilized by the appellants and part of it is transmitted to KPTCL. This Bench in the case of Nizam Deccan Sugars Ltd. 2008 (2) TMI 162 - CESTAT, BANGALORE held that capital goods used in Go-Gen power plants for generation of electricity part of which is used by the manufacturers of final product and part of it is sold to power distribution companies are admissible for credit. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Availability of credit on TMT Bars/Rods/Angles used in the power generation Co-Gen plant.

Analysis:
The case involved M/s. Sri Chamundeshwari Sugars Ltd. setting up a co-generation plant for generating electrical power using bagasse as fuel and availing credit on capital goods falling under Chapter 72 and 73 of the CETA, 1985. The Department alleged that certain credits were ineligible, leading to a show cause notice proposing to deny CENVAT Credit. The Commissioner held that specific credits were not available to the appellants, resulting in an imposition of penalty. The appellants challenged this decision, citing various judgments supporting the admissibility of CENVAT Credit on capital goods used in Co-Gen plants.

The appellants argued that courts and tribunals had consistently upheld the admissibility of CENVAT Credit on capital goods used in Co-Gen plants, citing multiple cases as precedents. The learned AR reiterated the Commissioner's findings, leading to a hearing where both sides presented their arguments, and the records were reviewed. The Tribunal examined the issue of credit availability on TMT Bars/Rods/Angles used in the Co-Gen plant for power generation. They noted that the matter had been settled by previous judgments, specifically referencing the Nizam Deccan Sugars Ltd. case where it was held that capital goods used in Co-Gen power plants for electricity generation are admissible for credit when part of the power is used internally and part is sold to distribution companies.

Consequently, the Tribunal allowed the appeal, emphasizing the settled nature of the issue based on previous legal decisions. The operative portion of the order was pronounced on 29/08/2018.