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TMI Blog2018 (1) TMI 999X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal that the bagasse produced at the premises engaged in manufacture of sugar and molasses, was consumed in entirety at the other premises being the co-generation power plant. Also, the Tribunal found that the electricity produced at the co-generation power plant at the other premises was used at the sugar and molasses plant and it was only in the off season that some part of electricity may have been sold to the State Electricity Department which as a fact was not found verified on record. In view of the provision of Section 2(e) of the Act read with Rule 2(t) of the Rules and as self classified by the CBEC circular/instructions, the activities of the assessee at the two separate premises in question were clearly interlinked. 'Factory' under Section 2(e) of the Act, means any premises where part of manufacturing processes connected with the production of goods is carried on. Therefore, once it had been found that electricity produced at one premise of the assessee had been used to manufacture of sugar and molasses at the other premise and also that the bagasse manufactured at the other premises of the assessee (sugar and molasses plant) had been used to generate electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as the 'assessee'). The appeal had been filed against the order-in-appeal passed by the Commissioner (Appeals), Meerut arising from the order-in-original dated 4.12.2006 passed by the Assistant Commissioner Central Excise, Saharanpur rejecting the application filed by the assessee for extension of it's registration to include the premises housing the co-generation power plant installed beyond the approved ground plan. According to the Tribunal, the co-generation power plant had been installed by the assessee in the factory of manufacture (of final product) with reference to Rule 3 of CENVAT Credit Rules, 2004 (hereinafter referred to as the Rules) read with Section 2(e) of the Act and instructions issued by the Central Board of Excise and Customs (CBEC in short) for the purpose of grant of registration. In short, admittedly the assessee obtained registration with the Central Excise Department and engaged in the manufacture of sugar and molasses. The assessee also availed CENVAT credit in accordance with Rules. Thereafter, it installed a co-generation power plant outside the approved factory ground plan to produce electricity and steam. Admittedly, a co-generati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration. Appeal No. 332 of 2015: This appeal has been filed by the revenue under Section 35-G of the Central Excise Act, 1944 (hereinafter referred to as the 'Act') against the order of the Tribunal dated 26.05.2015. It was admitted on the following question of law:- Whether the CESTAT is correct in allowing the CENVAT Credit on plant and machinery as capital goods installed in the Co-generation power plant which is outside the approved factory premises and without bringing the same in their factory and without using the same in the manufacturing of finished goods. By that order, the Tribunal had allowed the appeal filed by the assessee. That appeal was filed against the order in appeal passed by the Commissioner (Appeals), Meerut arising from the order-in-original dated 22.02.2007 passed by the Assistant Commissioner Central Excise, Saharanpur. The assessee had availed CENVAT credit amounting to ₹ 2,06,86,247/- arising on capital goods namely co-generation power plant against removal of sugar and molasses. The aforesaid CENVAT credit was sought to be recovered from the assessee. It led to issuance of show cause notices for the period January 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other side of the public road. Therefore, the assessee was not entitled to a single registration. Opposing the submissions so advanced by learned counsel for the revenue, Sri Puneet Bansal and Sri Nishant Mishra appearing for the assessee submitted that the matter of grant of registration is governed by Section 2(e) read with Section 6 of the Act; the Central Excise Rules, 2002 read with the instructions issued by the CBEC. Relying on the meaning of the word ''factory' as defined under Section 2(e) of the Act, it has been submitted, for the purpose of the Act and therefore, for grant of registration under the Act, 'factory' means any premises where exciseable goods are manufactured or wherein or in any part of which, any manufacturing processes connected with the production of such goods is carried on or is ordinarily carried on. For ready reference Section 2(e) of the Act is quoted below:- Section 2. Definitions:- In this Act, unless there is anything repugnant in the subject or context, [(a)..... (aa)..... [(aaa).... [(b)..... (c)..... (d).... (e) factory means any premises, including the precincts thereof, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res, carries on trade, holds private store-room or warehouse or otherwise uses exciseable goods (or an importer who issues an invoice on which CENVAT Credit can be taken), shall get registered: Provided that a registration obtained under rule 174 of the Central Excise Rules, 1944 or rule 9 of the Central Excise (No. 2) Rules, 2001 shall be deemed to be as valid as the registration made under this sub-rule for the purpose of these rules. (2) The Board may by notification and subject to such conditions or limitations as may be specified in such notification, specify person or class of persons who may not require such registration. (3) The registration under sub-rule (1) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. In this background, reliance has been placed on paragraph 3.2 of the Circular issued by the CBEC. It has been submitted that the process of manufacture of sugar and molasses was interlinked with the processes to manufacture steam and electricity using bagasse inasmuch as the sugar and molasses plant used the electricity generated by the co-generation power plant for its processes and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 providing for conditions, safeguards, procedure etc. pertaining to grant of registration. Clearly if a person is manufacturing two different items at two different premises, he is required to obtain separate registrations in respect of such separate process involving separate premises. In view of the supplementary instructions 3.2 extracted above, it was clearly stipulated that though generally separate registration are required in respect of separate premises, however, such premises may be treated to be same/one 'factory' where the processes performed at two different premises are interlinked even though such premises may have been physically segregated by a public road, canal or railway line. Thus, as a general rule separate registration are required for separate premises. However, as an exception, a single registration may be granted in respect of two or more premises that may even be segregated by a public road, canal or railway line, if the processes performed at such different premises thus segregated are interlinked. Illustratively, it has been provided by the circular/instructions that processes may be treated to be interlinked if the product manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with the production of goods is carried on. Therefore, once it had been found that electricity produced at one premise of the assessee had been used to manufacture of sugar and molasses at the other premise and also that the bagasse manufactured at the other premises of the assessee (sugar and molasses plant) had been used to generate electricity at the premise of the assessee generating electricity, it appears the two premises together would constitute the 'factory' of the assessee under Section 2(e) of the Act. In view of the aforesaid findings of fact recorded in the context of law that governs grant of registration, we find that the Tribunal has recorded findings of fact based on evidence on record and applied the correct test to conclude that the assessee was entitled to a single registration for interlinked processes though the process of manufacture of sugar and molasses was being carried out at a premise segregated by a public road from the other premise engaged in generating steam and electricity. The aforesaid finding of the Tribunal did not suffer from any infirmity. The own understanding of the CBEC in this regard noticed above is also consistent with suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; under Section 2(e) of the Act. Then, for the purpose of availment of CENVAT credit, it has to be examined whether the assessee could take credit of the CENVAT arising on capital goods used to generate electricity against central excise duty payable on removal of sugar and molasses. In this regard, the provisions of Rule 3 of the Rules are relevant. It reads as below: Rule 3. CENVAT credit:- (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of- (i) ...... (ii)...... (iii)..... (iv).... (v)..... (vi)..... (vii)..... (viii)..... (ix)..... (x)..... (xi)..... paid on ..... (i) any input or 'capital goods' received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and While, there is no dispute that CENVAT credit had arisen to the assessee on the capital goods used to generate electricity, it is to be seen whether the said capital goods had been received in the 'factory of manufacture of final produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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