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TMI Blog2018 (8) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... 006-07. Since the capital goods, namely, wind mill was purchased and used for the manufacturing of cotton yarn, which is taxable goods, he is entitled to avail Input Tax Credit as per Section 19(3) of the TNVAT Act - The rejection of the claim on the ground that the wind mill does not form an integral part of the industrial premises, in which, the manufacturing is made and that the wind mill is situated at a far-off place, cannot be treated as capital goods in the manufacturing of cotton yarn, is not sustainable. Whether the power generated by the petitioner by erecting the wind mill was completely utilised for the manufacturing process, without there being any commercial exploitation, can be considered as capital goods or not? - Held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 20. 03. 2009 was issued by the third respondent to pay the amount which the petitioner adjusted against his claim of Input Tax Credit on the purchase of wind mill. Against the order of the original authority, a revision was filed in R. P. No. 11 of 2009 and the revisional authority remanded the matter by his order dated 16. 11. 2009, directing the original authority to provide an opportunity for making his objections. Thereafter, another order dated 17. 03. 2010 came to be passed confirming the rejection of Input Tax Credit claimed by the petitioner. Again, the petitioner preferred another revision and the second revision was rejected successively by the hierarchy of authorities. Aggrieved over the rejection, the petitioner is before this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods (for use in the manufacture of taxable goods), shall be allowed Input Tax Credit in the manner prescribed. In the instant case, the yarn manufactured by the petitioner is a taxable good and Rule 10(4) of the TNVAT Rules, lays down the procedure for availing Input Tax Credit. The claim shall be made within thirty days from the date of commercial production under intimation to the assessing authority. 8. As per Rule 10(4)(b) of the TNVAT Rules, the assessee is entitled to avail 50% of Input Tax Credit in the same financial year and the balance of Input Tax Credit, by the end of third financial year. After the expiry of third financial year, the unavailed Input Tax Credit, if any, shall lapse to the Government. 9. The petitioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Chemical Works reported in 1991 (55) ELT 444 (SC) the test laid down by this Court is whether the process and the use are integrally connected. As stated above, electricity generation is more of a process having its own economics. Applying the said test, we hold that when the electricity generation is a captive arrangement and the requirement is for carrying out the manufacturing activity, the electricity generation also forms part of the manufacturing activity and the input used in that electricity generation is an input used in the manufacture of final product. However, to the extent the excess electricity is cleared to the grid for distribution or to the joint ventures, vendors, and that too for a price (sale) the process and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. By ample evidence, the petitioner had proved that he has entered into an agreement with the Power Grid Corporation for transmitting the power and getting supply and then, the relevant column proved that it is not distributed to anybody else on commercial basis. In that event, when the erection of wind mill for the purpose of generating power in the manufacturing process shall be construed as capital goods, Input Tax Credit shall be made available to the assessee as per Section 19(3) of the TNVAT Act. 14. In view of the above discussions, the order passed by the first respondent in Revision Petition:J1/60/2010 for the assessment year 2007-08, dated 25. 11. 2010, is set aside and the petitioner is entitled to refund of the amount i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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