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M/s Jai Balaji Industries Limited Versus CCE & ST, Raipur

2016 (12) TMI 841 - CESTAT NEW DELHI

Demand of 10%/ 5% of the value of electricity - Rule 6 (3) of the Cenvat Credit Rules, 2004 - certain common inputs as well as input services used in the manufacture of dutiable final products as well as in the production of electricity - no separate records maintained - credit already reversed - Held that: - The Hon’ble Supreme Court in the case of Chandrapur Magnet Works (P) Ltd. vs. CCE, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA] has held that once cenvat credit is reversed, it is to .....

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e reversal. However, we find that in the order passed by the lower authority, he has not given any finding as to whether the reversal already made satisfies the test of proportionate reversal in terms of quantum of reversal. Hence, we are of the considered opinion that the matter is to be remanded to the original adjudicating authority to verify whether the amount of cenvat credit already reversed alongwith interest satisfies the requirement of proportionate reversal - appeal allowed by way of r .....

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ngaged in the manufacture of sponge iron. The electricity required for use within the factory premises is generated using a power plant installed in their factory premises. The appellant availed cenvat credit of certain common inputs as well as input services which were used in the manufacture of dutiable final products as well as in the production of electricity, but did not maintain separate accounts for the inputs as well as input services used for this. Since no duty has been indicated again .....

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alty. 2. In the present appeal, the demand for reversal of cenvat credit has been challenged. Their submission is that a part of electricity generated within the plant has been sold outside, though the main part of the electricity generated was used captively for manufacture of final products. They further submitted that they have already reversed proportionate share of the credit availed on inputs as well as input services which stand used in the generation of electricity which has been sold ou .....

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s inputs as well as input services which are used in the generation of electricity which is used to run the factory for manufacture of sponge iron and other products. Part of the electricity has been sold outside. In respect of inputs as well as input services attributable to the electricity used captively, the cenvat credit is fully justified and there is no justification for reversal. However, in respect of the portion of cenvat credit attributable to the inputs/ input services used in the gen .....

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on proportionate basis i.e. in respect of common inputs used in the generation of electricity wheeled out to Electricity Board. The same also stand intimated to the department. Such claims when made before the original authority has not been accepted by him for the reason that the appellant has not followed all the conditions specified in Rule 6(3)(i)(ii) and (iii) of the Cenvat Credit Rules, 2004. These sub-rules mandate that the assessee should intimate their option to the department for propo .....

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ity, will not be fair. 5. The Hon ble Supreme Court in the case of Chandrapur Magnet Works (P) Ltd. vs. CCE, Nagpur 1996 (81) ELT 3 (SC) which has been followed in many other decisions of the High Court as well as the Tribunal has held that once cenvat credit is reversed, it is to be considered ab initio not availed. In the light of this judgement of the Hon ble Supreme Court, the reversal of cenvat credit already made by the appellant is to be considered as not taken ab initio. The Government h .....

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