2005 (11) TMI 124 - AT - Central Excise

Summary

Issues: Eligibility of capital goods credit under Rule 57Q of the Central Excise Rules, 1944 for steam generating boiler parts, pressure transmitter, and other components of a captive power plant used for generating electricity mainly within the factory but partly sold to Tamil Nadu Electricity Board (TNEB) during Sept.-Nov.'95.

Summary:
The Appellate Tribunal CESTAT, Chennai, considered the appeal regarding the eligibility of capital goods credit under Rule 57Q of the Central Excise Rules, 1944 for certain components of a captive power plant. The issue revolved around whether the surplus electricity generated and sold outside the factory affected the assessee's entitlement to the credit. The Tribunal noted that the lower authorities had denied the credit based on the violation of the condition under the second proviso to Rule 57R(2), which required electricity generated within the factory to be fully utilized for manufacturing purposes. However, citing precedents such as Commissioner of Customs v. HEG Ltd., the Tribunal held that restricting the use of surplus electricity within the factory was neither logical nor possible. The Tribunal also referred to the case of Commissioner of Central Excise, Raipur v. Jindal Steel and Power Ltd., where capital goods credit was allowed for a similar scenario. Despite the lack of support from previous orders, the Tribunal found in favor of the assessee based on the Division Bench decisions cited by the counsel, ultimately setting aside the impugned order and allowing the appeal.