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TMI Blog2023 (6) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... eneficiation transferred to the factory. We find that low grade Ores cannot be used in the blast furnace directly and it needs to be beneficiated before it can be used in manufacture of HCFC. In both the cases, the services were used in relation to manufacture of dutiable final product on which appropriate excise duty was paid at the time of clearance of final product from the factory. Since, a clear nexus has been established between the services availed and goods manufactured at the factory, CENVAT credit on input services cannot be denied. Eligibility to avail CENVAT credit under captive arrangement with different registered factory - HELD THAT:- Karnataka High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S. MUKUND LTD. [ 2015 (4) TMI 696 - KARNATAKA HIGH COURT] held Cenvat cannot be deemed on the ground that credit is being availed by one factory and material inputs are used by three factories, because the Cenvatable input is being used for common share and continuous purpose of manufacturing dutiable goods. Though there are three separate units with separate registrations, the entire raw material is being converted into final dutiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on inputs, input services and capital goods and utilizing the same for payment of excise duty on clearance of HCFC from its factory. For manufacture of HCFC, Chrome Ore is the principle raw material. 3. The Appellant also have a captive Chromite Mine in Kaliapani, Sukinda. Vide order dated 22.05.2000, the Appellant was granted the mining lease by the Government of Odisha (Department of Steel and Mines) subject to the condition that the mine shall be exclusively used for captive purpose to ensure steady supply of Chrome Ore to the Charge Chrome/Ferro Chrome Plant. Within the mining area, the Appellant also has a Chrome Ore Beneficiation Plant ( COB Plant ) for upgrading low grade ores to high grade. The COB Plant is separately registered under the provisions of the Central Excise laws. 4. The high-grade Chrome Ores excavated from the mines are directly transferred to the factory for use in the manufacture of HCFC. However, the low-grade Chrome Ores are first transferred to the COB Plant and after its upgradation, it is transferred to the factory in entirety. The Appellant was discharging excise duty on removal of Ores from the COB plant to the factory through its Personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of Odisha on the premise that the Ores extracted from the mines shall be exclusively used for captive purpose to ensure steady supply of Chrome Ore to the Ferro Chrome Plant. The services received at the mines and capital goods at the COB plant have direct nexus with the manufacturing activity as chrome ores are principle raw material for manufacturing HCFC on which the Appellant was discharging appropriate excise duty. Therefore, there was no justification for the department to deny cenvat credit on input services and capital goods. Reliance was placed on the following decisions: - Vikram Cement v. CCE, Indore 2006 (197) ELT 145 (SC) - Madras Cement v. CCE, Chennai 2010 (257) ELT 321 (SC) - National Aluminium Co. Ltd v CCE 2019 (9) TMI 1520 (Tri- Kol) - CCE vs. Shree Cement Ltd. 2018 (16) GSTL 196 (HC Raj) - M/s Hindalco Industries Ltd v. CCE 2017 (2) TMI 715 (Tri Del) - Maihar Cement v. CCE 2013(296) ELT 209 (Tri- Del) - CCE v. Neelachal Ispat Ltd. 2022 (11) TMI 1091 (HCOdisha) - M/s Sanghi Ind. V. CCE 2019 (11) TMI 428 (Tri-Ahm) (b) The definition of input service under Rule 2(l) of the CENVAT Credit Rules is very comprehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on the following decisions: (i) CCE v. Mukund Ltd. 2015 (324) ELT 387 (Kar.) (ii) CCE v. KLJ Plasticizers 2018 (364) ELT 297 (Tri- Ahmd) (iii) Sangam Spinners v. Commissioner 2007 (208) ELT 386 (Tri.-Del) (iv) Mahabir Jute Mills Ltd. v. Commissioner 2007 (220) ELT 121 (Tri.-Del) (v) Diamond Cements v. Commissioner 2004 (169) ELT 34 (Tri.-Del) (vi) CCE v Hira Ferrro Alloys Ltd 2022 (9) TMI 267(Tr- Del) (vii) CCE v Biocon 2014 (309) ELT 66 (Kar) (viii) M/s Sanghi Ind. V. CCE 2014 (2) TMI 278 (Tri- Ahm) (e) It was also argued that assuming without admitting that COB Plant is a distinct entity, it may still qualify as Job-worker and CENVAT credit of capital goods used at job-worker s premise would still be available in the hands of the Appellant in accordance with Rule 4(5) of the Cenvat Credit Rules. Further, it is a settled principle of law that substantive benefit cannot be denied for procedural lapses, if there is no loss of revenue to the Government exchequer. Reference was made to the following decisions: - M/s Alkem Loboratories v. CCE 2014 (TMI) 686 (Tri-Ahm) (f) Use of the input services and capital goods for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the premise that the assessee was engaged in manufacture of exempted goods. However, in the present case of the Appellant, the mines, COB plant and the Factory are under the captive arrangement, the process of mining, beneficiation and use of ores in the factory are interlinked and inter dependent and concentrated ores are cleared on payment of duty for use in manufacture of HCFC at the factory and there is no loss of revenue as the Appellant had availed CENVAT Credit only once at the factory after payment of duty. 13. Heard both sides and perused the appeal records. 14. We have carefully gone through the relevant documents and cases relied upon. We find that the issue required to be decided in the present Appeal is whether the CENVAT credit on services availed at the mines and capital goods installed at the COB Plant would be an eligible credit in the hands of the factory. We find that the mines and COB Plant at Sukinda and factory at Balgopalpur are integral part of the same captive arrangement which is evident from Government of Odisha Order dated 22.05.2000, whereby mining lease was granted with a condition that it shall be exclusively used for captive purpose to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture steel products. The records disclose that whatever was manufactured by M/s. Kalyani Steels Limited in the ratio agreed to between the parties was finally made over to the respondent herein for manufacture of final product. Therefore, it appears, the companies joined hands to manufacture the final products in terms of the Strategic Alliance Agreement. In the circumstances, we hold that Cenvat cannot be deemed on the ground that credit is being availed by one factory and material inputs are used by three factories, because the Cenvatable input is being used for common share and continuous purpose of manufacturing dutiable goods. Though there are three separate units with separate registrations, the entire raw material is being converted into final dutiable product in continuous, interconnected and integrated process conforming to the definition of a single factory under Section 2(f) of the Central Excise Act. 17. Further, the principle of law allowing CENVAT credit when use of goods and services are inextricably connected with the manufacturing process have been well settled in the decisions: - CCE vs. v. Shree Cement Ltd. 2018 (16) G.S.T.L. 196 (Raj.) 18. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put into use for generation of electricity in Waste Heat Recovery System. The electricity so generated is indisputably used by the appellant in their manufacturing process. These being admitted facts, Revenue s case that the capital goods are installed in the adjacent premises of sister concern who are engaged in power generation, cannot be valid reason for denial of such credit. It is seen that the capital goods now in dispute are for generation of electricity out of Waste Heat Energy System which arise out of three generator sets using natural gas as fuel. The exhaust heat given out during the course of production of electricity in these generators is being used by the Waste Heat Recovery Power Plant. It necessarily follows that such Waste Heat Recovery Power Plant is to be integrated to the original power generation process, so that waste energy by way of exhaust can be put into beneficial use of further power generation. Keeping these factual details in mind, we find no justification to deny the credit on these capital goods only on the ground that these are installed in the premises of sister Unit. 7. Hon ble Supreme Court in the case of Vikram Cement v. Commissioner of C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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