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2015 (6) TMI 404 - AT - Central ExciseDemand of CENVAT Credit - fuel used in the generation of electricity cleared to DHBVNL - sending electricity on job work and receiving back - Rule 4(5)(a) - Penalty u/s 11A - Contravention of Rule 2(k) and 3 of the CENVAT Credit Rules, 2004 - Held that:- there is no sale of electricity to the power grid. It is also noted that the electricity sent to power grid was returned back to the Appellant, which was further used in the manufacture of final product. The Hon ble Supreme Court categorically observed that the reversal of credit would be required on the wheeled out of electricity at a price to the joint venture/vendor etc, for manufacture. In the present case, there is no sale of electricity, and the same was returned back to their factory for consumption in their final product. - Adjudicating authority denied the CENVAT Credit on inputs used for generation of electricity supplied to the grinding unit. The Appellant argued that the power plant can be a job worker o the Appellant and that the inputs sent by Appellant to the job worker plant, for generation of electricity brought back to the Appellant for manufacture of final product. The Tribunal held that proportional credit of inputs sent by clinker unit to the power plant under Rule 4(5)(a), corresponding to generation of electricity used in the DMW plant and administrative block will be eligible as CENVAT Credit. Electricity sent for synchronization to power grid, would be treated as job worker. There is no dispute that the electricity was returned back to the Appellant s factory, and there is a substantial compliance with the provisions of Rule 4(5)(a) of the Rules. - impugned order cannot be sustained and accordingly, it is set aside. - Decided in favour of assessee.
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