Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1092 - AT - Central ExciseCENVAT Credit - input services used in production of exempt goods - denial on account of nexus with taxable final products - It is the case of the Revenue that the input services in question were used in or in relation to the power plant which produced electricity which is exempt and not in or in relation to the manufacture of the final product namely sugar - HELD THAT:- The term ‘manufacture’ is not defined in Cenvat Credit Rules, 2004 and therefore should be interpreted as per the definition of the term in Section 2(f) of the Central Excise Act, 1944 according to which manufacture “includes any process incidental or ancilliary to the completion of the manufactured product”. Therefore, the definition of manufacture itself is quite wide in the Central Excise Act - The scope of the term input service under Cenvat Credit Rules, 2004 is still wider including services used by a manufacturer ‘whether directly or indirectly in or in relation to the manufacture of the final products’. It is not in dispute that the final products in this case is the sugar and that the electricity from the captive power plant and the steam generated from it were used for manufacture of the sugar. The input services in question were, in turn, used for running the captive power plant, in relation to coal, transporting Bagasse, etc. Therefore, these input services which were used in the captive power plant were indirectly used in the manufacture of sugar or in relation to such manufacture. Therefore, the input services in question fall within the definition of input services under Rule 2(k) of Cenvat Credit Rules, 2004. Whether electricity so generated is used within the factory only or is also sold outside? - HELD THAT:- It is used partly in the factory, and partly sold to grid. If the ‘input services’ were divisible, credit could be denied to the extent the input services were used in relation to generation of electricity sold to the grid. However, the nature of the services is such that they cannot be divided - As far as the inputs are concerned there is provision for reversal of proportionate amount of cenvat credit under Rule 6. This however does not extend to the input services. Credit allowed - appeal allowed - decided in favor of appellant.
|