TMI Blog2015 (6) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. - Appeal No. E/2669/2006-EX(DB) - Final Order No. 51696/2015 - Dated:- 22-5-2015 - Mr. P.K. Das, Hon ble Member (Judicial) And Mr. P.S. Pruthi, Hon ble Member (Technical),JJ. For the Appellant : Shri B.L. Narsimhan, Ms.Swati Gupta - Advocates For the Respondent: Shri Devender Singh, Commissioner (A.R.) ORDER Per: P.K. Das 1. The relevant facts of the case, in brief, are that the Appellant is engaged in the manufacture of Steel Slabs, Ingots, Blooms e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i III 2009 (240) ELT 641 (SC) would not be applicable in their case for the reason, in the present case, the electricity wheeled out to the power grid was not sold and it was returned back to them. He also referred the decision of the Hon ble Supreme Court in the case of Commissioner, Central Excise, Bhavnagar Vs M/s Ultratech Cement Ltd 2009-TIOL-95-SC-CX. He further submits that the Rule 4(5)(a) of CENVAT Credit Rules 2004 allowed the assessee to remove the inputs or capital goods as such or after being partially processed outside of the factory premises to a job worker for further processing. In the present case, the Appellant sent the electricity to the power grid, which was received back in their factory and used in the manufacture of final product, would come within the purview of Rule 4(5)(a) of the Rules, 2004. He submitted Written Submissions with case laws. 3. On the other hand, the learned Authorised Representative for the Revenue reiterates the findings of the Adjudicating authority. He submits that the decision of the Hon ble Supreme Court in the case of M/s Maruti Suzuki Ltd (supra) would be squarely applicable in the present case. It is submitted that the Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onisation. The learned Advocate contended that the Appellant was importing higher quantum of electricity other than the unit, that were being exported to the grid. So, it is not a case of sale of excess electricity generated in the captive power plant to the energy grid. The fact of the case is more clearly transpired from the order of the Tribunal in the Appellant s own case vide Final Order dt.21.08.2008 as under:- 5. We find that the appellants availed credit in respect of inputs used in generation of electricity. The appellants entered into agreement with the State Electricity Board termed as Wheeling Agreement by which the appellants were permitted to clear electricity generated in the captive power plant and simultaneously to receive equal quantity of electricity from the Electricity Board. The fact that the appellants received same quantity of electricity which were cleared to the Electricity Board is not in dispute. This arrangement was made as the electricity generated in the captive power plant is fluctuating type and as such power cannot be used in the Arch Furnace, Strip mill and Grooming mill. The agreement with the Electricity Board was to maintain uniform frequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oday in the case of M/s Maruti Suzuki Ltd Vs Commissioner, Central Excise, Delhi-III Civil Appeal No.of 2009 (arising out of S.L.P. (C) No.3826 of 2009) = 2009-TIOL-94-SC-CX, the civil appeals herein filed by the Department are allowed and the matters stand remitted to the Adjudicating authority who will in each case ascertain whether any excess electricity was wheeled out/cleared at a price in favour of joint ventures, vendors, sister companies etc and, if so, the Adjudicating authority will calculate and charge duty or reverse credit to that extent alone. However, as stated above, the Department will not impose penalty in that regard for the disputed period(s). 8. In the present case, 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Revenue strongly relied upon the decision of the Hon ble Supreme Court in the case of M/s Maruti Suzuki Ltd (supra). 12. The relevant portion of the decision of the Hon ble Supreme Court in the case of M/s Sanghi Industries Ltd (supra) is reproduced below:- 13. From the above provisions of Cenvat Credit Rules, 2004 it is evident that Cenvat credit of inputs will be admissible to an assessee when the inputs are sent to a job worker and after undertaking the required manufacturing processes the final products can also be cleared on payment of duty from the premises of the job worker subject to imposition of certain cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Cenvat credit with respect to inputs, sent to the power plant by the clinker unit for generation of electricity sent to grinding unit, cannot be denied to the appellant for not following the prescribed procedures of Rule 4(5)(a) and Rule 4(6) of the Cenvat Credit Rules, 2004 which allowed the appellant to send the clinker to grinding unit under job work and then clear the finished goods from the job worker s factory premises when diversion of inputs/electricity is not alleged by the Revenue. 13. In the present case, we have already observed that the 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. So, the submission of learned Authorised Representative for the Revenue cannot be accepted on this issue also. 14. In view of the above discussion, we find that the impugned order cannot be sustained and accordingly, it is set aside. The appeal filed by the Appellant is allowed with consequential relief. (Pronounced in Court on 22.05.2015) - - TaxTMI - TMITax - Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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