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TMI Blog2014 (2) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Abdasa of Kutch District. The Clinker unit was set up in the year 1997-98. The appellant set up a captive power plant at a distance of about 14 kilometer from the Clinker unit, as there was no state grid nearby to cater to the needs of electricity for the project. The appellant also set up a de-mineralization water plant (DMW plant) and Administrative Office at the Clinker unit. In the year 2001, the appellant set up its Grinding unit for the manufacture cement out of cement clinker manufactured at their Clinker unit. Around 95 percent of the clinker produced by the Clinker unit of the appellant is used in the Grinding unit to manufacture cement. The appellant also set up captive jetty at the Grinding unit to receive raw materials through sea and to export clinker and cement. On scrutiny of the ER-1 Returns filed by the appellant, the Departmental Officers found that the appellant had been availing irregular CENVAT Credit on furnace oil/ lubricants etc., as the 'inputs' on which cenvat credit is taken are actually used in the power plant outside appellants Clinker unit, and that they had been supplying electricity from the power plant to the Grinding unit, Clinker unit, jetty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2006. (b) That the Hon'ble Tribunal has already decided this issue in appellant's favour holding that appellant's power plant can act as a job worker for the Clinker unit in terms of Rule 4(5)(a) of the CENVAT Credit Rules, 2004. That the adjudicating authority has also held in the impugned Orders in Original that the power plant could be considered as a job worker for the Clinker unit but could not act as job worker to Grinding unit/residential colony/jetty/DM water plant etc. as grinding unit is not the supplier of fuel etc., to power plant for conversion to electricity, and that the entire credit had been availed by the Clinker unit. It was their case that the entire credit had been taken by the Clinker unit because it was set up first and thereafter administrative block was also set up at Clinker unit only. All the invoices were issued by the suppliers at the address of Clinker unit. He submits that in the present matters inputs can be treated to have been sent by the Grinding unit directly to the job worker. Ld. Sr Advocate Shri Sridharan, relied upon the case laws Indorama Textiles Ltd. Vs. CCE, [2007 (220) ELT 471] (Tri. Mumbai), CCE, Nagpur Vs. Indorama Textiles Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of Rs 40,00,11,585/- with respect to exemption No.39/2001-CE dt. 31.07.2001. (e) That CENVAT Credit cannot be denied to the extent electricity used in DM water plant and in the Administrative block which are located within the premises of the Clinker unit and has to be treated as a use in or in relation to the manufacturer to clinker. It was also argued that captive jetty is a part of the grinding factory and proportionate credit attributable to electricity supplied to jetty cannot be said to be inadmissible as the same is a use in or in relation to the business activities of the appellant. 5. Shri K Sivakumar (AR) and Shri S K Mall (AR) appearing on behalf of the Revenue made, inter-alia, the following arguments: (a) That the learned commissioner has already allowed proportionate credit of inputs used in the generation of electricity supplied to the Clinker unit. That the issue of wheeling out of power to Grinding unit, Jetty, and residential colonies is not covered by the appellant's own case reported as 2006 (206) ELT 575 (Tri. Ahmd.) (b) That since the other units of the appellant viz., Clinker unit, Grinding unit, Power plant, Desalination plant and the jetty are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009(238)ELT 420(Tri.-LB)]. (i) That the judgment of Supreme court in the case of M/s Maruti Suzuki Ltd., vs CCE, Daman [209(240)ELT 641 (SC)] is squarely applicable to the present case and credit has been correctly denied to the appellant in view of the law laid down by the Supreme Court. 6. Heard both sides, perused the case records and the written submissions made by both sides. 7. The issues involved in these appeals are the following : i) whether cenvat credit of Rs 9,87,045/- availed by the appellant; with respect to angles, channels, CTD bars etc. used in the construction inside the factory is admissible or not. ii) whether cenvat credit of inputs fuels/oils sent by clinker unit to the captive power plant for generation of electricity, is admissible under the provisions of cenvat credit Rules 2004 with respect to electricity supplied to : a) the DMW plant and administration block situated within the clinker unit. b) The residential colony of the clinker unit. c) The grinding unit and the jetty situated at a distance of 14 km from the clinker unit. 8. Appellant has argued that as per their own case reported as [2006 (206) ELT 575 (Tri. Del.)] the Power plant can be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 7. There is no two opinion that both the factories are near to each other and it is owned by the same owner and the common balance sheet is maintained. But, by this can it be said that both the factories are one and the same. The definition of the 'factory' as defined in Section 2(e) of the Central Excise Act, 1944, reads as under : (e) 'factory' means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on; 8. Simply because both the factories are in the same premises that does not lead to the inference that both the factories are one and the same. In the present case, from the facts it is apparent that there is no commonality of the purpose, both the factories have a separate entrance, there is a passage in between and they are not complimentary to each nor they are subsidiary to each other. The end product is also different, one manufactures duplex board and the other manufactures paper. They ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, vendors, joint ventures etc., which was sold at price. However, in the case of hand, electricity was wheeled out only in favour of sister units and as such, there was no element of sale. 18. The order passed by the CESTAT does not contain any discussion about the contention now raised by the assessee or the distinguishing features. CESTAT by following the earlier decision of the Tribunal, held that the assessee is entitled to credit inspite of the fact that electricity so generated was used in the other units also. The CESTAT has not decided the question as to whether the electricity supplied to the other units of the assessee situated in different premises are also entitled to the credit. The sale made to the other concern was also not made referred to the order passed by the Tribunal. 12. Appellant has also agitated that procedural irregularities or non-compliance cannot be made the grounds for denying admissible cenvat credit when electrify supplied has been used for making goods on which duty is payable. It was argued that Rule 4(5)(a) and Rule 4(6) of the Cenvat Credit Rule 2004 the clinker unit could have sent 'clinker' under job work to the grinding unit and cleared th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent to a job worker when such inputs are used outside the factory premises of the manufacturer taking cenvat credit, however subject to some conditions. In the case of appellant power plant has been held and accepted by the adjudicating authority to be a job worker of the clinker unit. On the same analogy grinding unit could also act as a job worker of clinker unit for manufacturing cement. In such situations both the clinker and the electricity supplied to the grinding unit by the power plant can be treated as 'inputs' supplied to job worker (grinding unit) for which credit has been taken by the clinker unit. As all the registered units belong to the same group of companies, therefore, what has not been done by the appellant is not following properly the prescribed procedures. Alternately, appellant could have sold proportionate electricity generating fuel to its grinding unit by reversing proportionate Cenvat credit which could have been availed as cenvat credit by the grinding unit as per the law laid down by CESTAT, Mumbai in the case of M/s Indo Rama Textiles Ltd vs CCE, Nagpur [2007(220)ELT 471 (Tri. Mumbai)] relied upon by the appellant. 14. From the above observations a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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