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2023 (6) TMI 298 - AT - Central ExciseRecovery of inadmissible Cenvat Credit - Input Services - Capital Goods - denial on the premise that factory and COB Plant are having separate registration numbers and one cannot take credit of another - 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? HELD 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 ensure steady supply of Chrome Ore to the Ferro Chrome Plant. As it is seen from the submission of the Appellant that the services of mining, cargo handing etc. were used for excavation and transportation of ores to the factory. While the high grade Ores were directly transferred to the factory for use in manufacture of HCFC, the low grade Ores were first transferred to the COB Plant and after its beneficiation 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 product in continuous, interconnected and integrated process conforming to the definition of a single factory under Section 2(f) of the Central Excise Act - CENVAT credit of input service would be admissible in the hands of the factory. CENVAT Credit on capital goods - HELD THAT:- The department has not disputed the duty-paid nature of the capital goods, discharge of duty by the appellant, usage of capital goods for generation of electricity and consumption of such electricity by the appellant in the manufacture of dutiable final products. In these factual matrix, there are no justification to deny the credit on the capital goods availed by the appellant. Accordingly, the impugned order is set aside, the appeal is allowed. COB Plant is an integral part of the factory and it has no separate legal identity. We also observe that the invoices were issued in the name of the Appellant and credit was availed only once after payment of duty by the factory. Further, the department has not disputed the nature of goods being capital goods, its use in manufacture of concentrated Ores which are ultimately used in manufacture of dutiable final products i.e. HCFC - there are no justification to disallow the credit on capital goods availed by the Appellant. Denial of CENVAT credit on input services and capital goods is not sustainable - Appeal allowed.
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