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TMI Blog2019 (11) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. L. Patra Authorized Representative for the Respondent ORDER The brief facts of the case are that the appellant are a lignite based cement manufacturing unit. The entire manufacturing unit consists of a clinker unit, a grinding unit, a captive power plant and a water desalination plant (DMW plant). Adjacent to the grinding unit is a captive jetty which is also owned by the appellants. The manufacture of clinker unit and is transferred there from to the grinding unit of the appellants for manufacture of cement. Both units had separated Central Excise Registration during the relevant period. The manufacturing of clinker and cement is being carried out using power generated from a captive power plant located in the vicinity of the clinker unit. The power generated is transmitted to the clinker and grinding units using the company s private 200Kv transmission lines installed within the company s premises. The desalination plant uses electricity to de-mineralize water for supply to the other units, the clinker unit uses the electricity to manufacturing clinker for supply to grinding unit, the grinding unit uses the electricity to manufacture cement fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in any case. This appeal filed against Order-In-Appeal No.RJTEXCUS- 000-APP-89-14-15 dated 17.06.2014. In the said Order out of total demand of ₹ 80,30,798/- proposed in the show cause notices, the Ld. Commissioner (Appeals) has allowed Cenvat credit of ₹ 53,63,257/- pertaining to electricity supplied to the grinding unit and denied Cenvat credit of ₹ 26,67,541/- pertaining to electricity supplied to the residential colony and jetty. To the extent that Cenvat credit of ₹ 65,445/- pertaining to residential colony is denied, the appellant did not challenge the same. However, the denial of Cenvat credit of ₹ 26,02,096/- pertaining to electricity supplied to captive jetty was challenged by the appellant vide Appeal No. E/13476/2014 and the said stands allowed by this Hon ble Tribunal vide the Final Order dated 07.11.2017, therefore, the Cenvat credit of inputs used in generation of electricity supplied to the grinding unit and jetty stands settled by this Hon ble Tribunal in the appellants own case. He also placed reliance upon the following judgments:- Sanghi Industries Ltd-2014 (302) ELT 564 (T) Indorama Textiles Ltd-2007 (2200) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker units the same was used but part of the electricity generation was used by the appellant s the grinding units, therefore, the credit is admissible this issue is no longer res-Integra as both the issue were addressed by this Tribunal in the appellants own case which are extracted below:- Sanghi Industries Limited vs. C.C.E- Sanghi Industries Ltd-2014 (302) ELT 564 (T) 7 . The issues involved in these appeals are the following : (i) Whether Cenvat credit of ₹ 9,87,045/- availed by the appellant; with respect to angles, channels, CTD bars, etc., used in the construction inside the factory is admissible or not? (ii) Whether Cenvat credit of inputs fuels/oils sent by clinker unit to the captive power plant for generation of electricity, is admissible under the provisions of Cenvat Credit Rules, 2004 with respect to electricity supplied to : (a) The DMW plant and administration block situated within the clinker unit? (b) The residential colony of the clinker unit? (c) The grinding unit and the jetty situated at a distance of 14 km from the clinker unit? 8 . Appellant has argued that as per their o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. v. CCE, Delhi-III (supra) laid the following law in Paras 7 8 of this judgment : 7. There is no two opinion that both the factories are near to each other and it is owned by the same owner and the common balance sheet is maintained. But, by this can it be said that both the factories are one and the same? The definition of the factory as defined in Section 2(e) of the Central Excise Act, 1944, reads as under : (e) factory means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between and they are not complimentary to each nor they are subsidiary to each other. The end-product is also different, one manufactures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rates in favour of sister units, vendors, joint ventures, etc., which was sold at price. However, in the case of hand, electricity was wheeled out only in favour of sister units and as such, there was no element of sale. 18. The order passed by the CESTAT does not contain any discussion about the contention now raised by the assessee or the distinguishing features. CESTAT by following the earlier decision of the Tribunal, held that the assessee is entitled to credit in spite of the fact that electricity so generated was used in the other units also. The CESTAT has not decided the question as to whether the electricity supplied to the other units of the assessee situated in different premises are also entitled to the credit. The sale made to the other concern was also not made referred to the order passed by the Tribunal. 12 . Appellant has also agitated that procedural irregularities or noncompliance cannot be made the grounds for denying admissible Cenvat credit when electrify supplied has been used for making goods on which duty is payable. It was argued that Rule 4(5)(a) and Rule 4(6) of the Cenvat Credit Rules, 2004 the clinker unit could have sent clink ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the Cenvat Credit Rules, 2004, therefore, provisions exist to allow the credit of inputs sent to a job worker when such inputs are used outside the factory premises of the manufacturer taking Cenvat credit, however subject to some conditions. In the case of appellant power plant has been held and accepted by the adjudicating authority to be a job worker of the clinker unit. On the same analogy grinding unit could also act as a job worker of clinker unit for manufacturing cement. In such situations both the clinker and the electricity supplied to the grinding unit by the power plant can be treated as inputs supplied to job worker (grinding unit) for which credit has been taken by the clinker unit. As all the registered units belong to the same group of companies, therefore, what has not been done by the appellant is not following properly the prescribed procedures. Alternately, appellant could have sold proportionate electricity generating fuel to its grinding unit by reversing proportionate Cenvat credit which could have been availed as cenvat credit by the grinding unit as per the law laid down by CESTAT, Mumbai in the case of M/s. Indorama Textiles Ltd. v. CCE, Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit of inputs used for generating and supplying electricity to the grinding unit of the same group companies is allowed. As the issue of admissibility of Cenvat credit on this inputs in the present proceedings was highly contentious and debatable this case is not fit for imposing penalties upon the appellant where credit is disallowed and are accordingly set aside. C.C.E, Vs. Sanghi Industries Limited Final Order No. A/13456-13458/2017 dated 07.11.2017 6. I find that this issue has been considered by this Tribunal in their own case reported as Sanghi Industries Ltd. Vs. Commissioner of Central Excise, Rajkot 2014 (302) ELT 564 (Tri.-Ahmd.). After analyzing the provisions of law it is observed as follows:- 16.Based on the above observations, appeals filed by the appellants with respect to Cenvat credit taken on structural items (Para 15 above), electricity supplied to DMW plant used for supplying demineralized water to Gujarat Water Board (Para 8 above) and electricity, supplied to residential colonies of the appellant (Para 9 above) is rejected. Appeal of the appellant with respect to Credit of inputs used for generating and supplying e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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