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2008 (6) TMI 198 - AT - Central ExciseCenvat Credit on Napthas used in generation of electricicy – appellant used “napthas” as input for generation of electricity and availed Cenvat credit. Show Cause notices were issued proposing to disallow Cenvat credit on such quantity of naptha which was used for the purpose of manufacture of electricity sold to their Joint Venture and Vendors in terms of Rule 6(1) of Cenvat Credit Rules, 2002. The Adjudicating Authority disallowed the credit of Rs. 67,71,876/- and Rs. 81,60,990/- and imposed penalty of equal amounts under Rule 13 of Cenvat Credit Rules, 2002 along with interest. – Held that on a plain reading of the phrase “within the factory of production” means only such generation of electricity or steam, which is used within the factory would qualify as an intermediate product. The utilization of inputs in the generation steam or electricity used outside of the factory not being qualified by the phrase ‘within the factory of production’ - demand of duty alongwith interest are upheld. The penalties are set aside.
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