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TMI Blog2019 (11) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... and grinding units using the company's private 200Kv transmission lines installed within the company's premises. The desalination plant uses electricity to de-mineralize water for supply to the other units, the clinker unit uses the electricity to manufacturing clinker for supply to grinding unit, the grinding unit uses the electricity to manufacture cement from clinker, the captive jetty is used to export the cement and the administrative building is used to manage supervise the smooth functioning of all the units. The periodical show cause notices were issued to the appellants proposing to deny and recover Cenvat Credit of duty paid on inputs and tax paid on inputs services used in the generation of electricity at the captive power plant and DG sets to the extent that the electricity is supplied to units other than clinker unit on the ground that the same cannot be held to have been used in the factory of production. The adjudicating authority deny the cenvat credit in respect of duty paid on inputs and Service Tax paid on input services vide Orderin- Original dated 28.06.2013 and 23.08.2013. In another proceeding against which Appeal No. E/13837/2013 and E/13320/2013 were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the Cenvat credit of inputs used in generation of electricity supplied to the grinding unit and jetty stands settled by this Hon'ble Tribunal in the appellants' own case. He also placed reliance upon the following judgments:- * Sanghi Industries Ltd-2014 (302) ELT 564 (T) * Indorama Textiles Ltd-2007 (2200) ELT 471 (T) * Indorama Textiles Ltd-2010 (260) ELT 382 (Bom.) * Solaris Chemtech Limited-2007 (214) ELT 481 (S.C.) * Shree Cement Ltd-2018 (160) GSTL 196 (Raj.) 3. Shri. L. Patra, Ld. Assistant Commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submissions made by both the sides and perused the records. The appeal vise issue involved is as under:- Appeal No. E/13837/2013 (i) Whether the Cenvat Credit availed on Furnace Oil and lubricating oils used in generation of electricity by the captive power plant and DG sets located at the clinker unit of the appellants is eligible to the extent that the electricity is supplied to the grinding unit, captive jetty, water desalination (DMW) plant, administrative building and residential colony of the appellants (i.e. places other than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) E.L.T. 575 (Tri.-Del.) the Power plant can be a job worker of the appellant and that the inputs sent by the appellant to the job worker power plant, for generation of electricity brought back to the appellant for manufacture of final product, were held to be eligible for Cenvat credit. We find that the DMW unit and the administrative block, are situated within the Clinker unit of the appellant and use of electricity in these units has to be considered as a use in connection with the manufacture of final product clinker. Therefore, proportionate credit of inputs sent by the 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 in the same manner as has been held by this Tribunal in the appellant's own case reported as 2006 (206) E.L.T. 575 (Tri.-Del.). However, Cenvat credit is not available with respect to such quantities of inputs which have been used by the Clinker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 are separately registered with the Central Excise Department. The staff is separate, their management is separate. It is also not the case of revenue that end-product of one factory is raw material for the other factory. From the above facts it is apparent that there is no commonality between the two factories, both are separate establishments run by separate Managers though at the apex level it is maintained by the appellant company. There are separate staff, separate finished goods. Simply because both the factories may have common boundaries that will not make it one factory. Accordingly, we are of the opinion that the view taken by the Tribunal does not appear to be wellfounded and likewise, the view taken by the Commissioner, Central Excise. Accordingly, we allow both these appeals, set aside the order of the Tribunal passed on June 7, 2002 as well as the order passed by the Commissioner, Central Excise, New Delhi-III on September 28, 2001 in both the appeals. No order as to costs." 10.1 In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rule 4(6) of the Cenvat Credit Rules, 2004 the clinker unit could have sent 'clinker' under job work to the grinding unit and cleared the final goods on payment of duty from the grinding unit. The said Rule 4(5)(a) and Rule 4(6) the Cenvat Credit Rules, 2004 are reproduced below : "Rule 4 : Conditions for allowing CENVAT credit. - (5)(a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M/s. Indorama Textiles Ltd. v. CCE, Nagpur [2007 (220) E.L.T. 471 (Tri.-Mumbai)] relied upon by the appellant. 14. From the above observations and the case laws relied upon by the appellant, it is inferred that procedures existed at the relevant time to avail Cenvat credit on inputs sent to the power plant as job worker. The only irregularity committed by the appellant was that they did not follow the prescribed procedures. It has been a settled position of law now that a substantial benefit of Cenvat credit cannot be denied for not following the prescribed procedures when it is not disputed that inputs on which credit is taken have been utilized for manufacture of final product on which Central Excise Duty has been paid/payable. In the case of sister concerns such captive consumption of materials become a case of revenue neutral exercise. It is not the case of the Revenue that electricity supplied to the grinding unit and its jetty has been diverted elsewhere. Further, it is economical in the modern competitive working to have a larger power plant catering to power requirements of various units of the same group of companies rather than having small power plants for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city to the grinding unit of the same group companies is allowed. As the issue of admissibility of Cenvat credit on this inputs in the present proceedings was highly contentious and debatable this case is not fit for imposing penalties upon the appellant where credit is disallowed and are accordingly set aside. 7. In the said judgment has been held that the appellant are not eligible to avail credit on inputs that has been utilized in their captive power plant for generation of electricity and used in their residential colony and at their DM water plant for supply of water to Gujarat State Water Board. In other cases credit availed on inputs, used in the generation of electricity which are distributed to the Grinding Unit and Jetty, has been held to be admissible. In the result, the assesses appeals are allowed and Revenues appeal is rejected." 4.2 It can be seen that from the both decision the issue in hand has been considered and the Cenvat credit was allowed in respect of inputs used in the captive power plant and desalination water to the extent it is used in the factory of the appellant, jetty and administrative building, however, the credit attributed to residential colony ..... X X X X Extracts X X X X X X X X Extracts X X X X
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