2017 (3) TMI 1360 - AT - Central Excise

CENVAT credit - denial on the ground that the said credit not used in or in relation to the manufacture of finished products in their Bharuch plant - Held that - the issue is no more res integra and covered by the decision of Hon ble Gujarat High Court in the case of Sintex Industries Ltd Tribunal below rightly applied the above decision of the Supreme Court in the case of Maruti Suzuki Ltd. 2009 (8) TMI 14 - SUPREME COURT to the facts of the present case as the assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which it is using the produced electricity within its factory which is registered for that purpose but not to the extent supplied to a factory which is registered for a different unit - penalty set aside - appeal allowed - decided partly in favor of assessee.

Summary

Issues:
- Admissibility of CENVAT Credit on input services used in electricity generation.
- Imposition of penalty under Rule 15(2) read with Section 11AC of Central Excise Act, 1944.

Analysis:

Issue 1: Admissibility of CENVAT Credit on input services used in electricity generation

The appeal was filed against an order confirming the demand for recovery of CENVAT Credit availed by the Appellants at their Bharuch plant during a specific period. The Appellants had used various input services in electricity generation, part of which was sold to Gujarat Electricity Board and the rest transferred to their Vadodara plant. The Appellant argued that since the electricity was used in their other units for manufacturing dutiable products, the CENVAT Credit availed at the Bharuch plant should not be considered inadmissible. The Appellant also contended that conflicting views existed on the admissibility of such credit at the relevant time. The Advocate referred to judgments of the Hon'ble Supreme Court to support their argument. However, the Authorized Representative for the Revenue cited a decision of the Hon'ble Gujarat High Court to assert that the credit was not admissible as the Bharuch plant and Vadodara unit had separate registrations.

Issue 2: Imposition of penalty under Rule 15(2) read with Section 11AC of Central Excise Act, 1944

The Appellant argued that no penalty should be imposed as the issue regarding the admissibility of CENVAT Credit on input services used in electricity generation was not settled at the relevant time, citing judgments of the Hon'ble Supreme Court in support. The Tribunal noted that the issue had been previously addressed by the Hon'ble Gujarat High Court, which concluded that the Appellant was entitled to credit on eligible inputs used in electricity generation only to the extent it was consumed within the factory registered for that purpose. The Tribunal agreed that no penalty should be imposed based on the specific findings of the Hon'ble Supreme Court.

In conclusion, the Tribunal set aside the order to the extent of penalty imposition, partially allowing the appeal.