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2016 (11) TMI 1218 - CESTAT HYDERABAD

2016 (11) TMI 1218 - CESTAT HYDERABAD - TMI - CENVAT credit - electricity generated used captively as well as sold outside - Held that: - any services used by a manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products upto the place of removal would be eligible for credit. The input services used for setting up of captive power plant, of which the electricity generated is not exclusively used for manufacture of final produ .....

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ularly disclosing the credit availed by them. When all details relating to the availment of credit are available with the department, the allegation that full facts were not furnished in the documents and that respondent suppressed facts is factually incorrect. In a number of decisions, the Tribunal and courts has held that there should be conscious or deliberate withholding of information with intention to evade payment of duty to saddle the manufacturer with liability beyond the period of one .....

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for the Appellant [Order per: Sulekha Beevi, C.S.,] 1. The respondents are engaged in the manufacture and clearance of Sponge Iron . During the course of verification of records of the assessee by the Departmental Officers, it was noticed that the assesses had availed/utilized service tax credit of ₹ 45,92,226/- in respect of input services such as Consultancy services, Erection & Commissioning Services etc., used in the installation of Electrical Power generation plant during the per .....

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out of which the assessee sold 9622581 units outside and 2484919 units were used for captive consumption. Similarly, for the year 2011-12, the unit generated 1,39,97,700 electricity out of which the assessee sold 1,14,04,678 units outside and 2593022 units were used for captive consumption. Therefore, the percentage of captive consumption and sold outside for commercial purpose for the entire period was in ratio of 19.45 : 80.55 2. A show cause notice dated 08-10-2012 was issued for the period J .....

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eferred appeal before the Commissioner(Appeals) who by the order impugned herein set aside the demand both on the merits as well on the ground of limitation. Being aggrieved, department has filed this appeal. 3. On behalf of the department, the Ld. AR, Shri P.S.Reddy reiterated the grounds of appeal. He referred to the definition of input service and submitted that credit of service tax paid on input service is eligible only when the input service is used by the manufacturer, whether directly or .....

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Maharastra Seamless Ltd 2012-25-STR-167 (Tri.Mum). He also submitted that appellants are guilty of suppression of facts as they failed to disclose the details of availment of Cenvat credit. But for the scrutiny of records, by department Officers, the fact of irregular availment of credit on input services used in power generation which in turn is sold outside would not have come to light. 5. On behalf of the respondent, the Ld. Counsel Shri B. Venugopal defended the findings in the impugned orde .....

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, engineering services, and construction services, for setting up of the captive power plant, during the period, July,2008 to July, 2011. It is also not disputed that the respondents had sold major portion of the electricity generated to outside distribution agencies. The definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 during the relevant period is reproduced as under: (l) "input service" means any service,- (i) used by a provider of taxable service for providi .....

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puts, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal; 8. From the above, it can be seen that any services used by a manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products up .....

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. The relevant portion of the judgment is reproduced as under: 5.2 It has been alleged that since the appellants are using the services for production of electricity, which is an exempted product. It has been alleged that they are not entitled to take credit of the tax paid on input services in terms of Rule 6(1) of the Cenvat Credit Rules, 2004. It is apparent that the appellants are using the said input services for production of electricity which is in turn used for manufacture of the final p .....

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:- 20. To sum up, we hold that the definition of input brings within its fold, inputs used for generation of electricity or steam, provided such electricity or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time to time in favour of its joint ventures, vendors etc. for a price and has also cleared suc .....

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hich is sold at a price. The Cenvat rules are common for both the inputs and for input services. Thus, what the Hon ble Supreme Court has held in case of inputs will apply to the input services as well. In the instant case they have infact not availed entire credit but only the credit which is admissible to them in terms of Rule 6(2) of the Cenvat Credit Rules, 2004. In view of above we find that there is merit in the appeal filed by the appellants on this count. The appeals E/85314/13, E/88466/ .....

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ufacture of excisable goods or for providing taxable services. Inasmuch as the appellant has utilized part of the inputs/input services in or in relation to the generation of electricity which has been sold, to that extent the appellant would not be eligible for taking of Cenvat credit on such inputs/input services used in the generation of electricity which has been sold to MSEB. Therefore the appellant would be liable to reverse the credit, if any, taken on such inputs/input services which hav .....

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