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2019 (11) TMI 428

..... to the grinding unit, captive jetty, water desalination (DMW) plant, administrative building and residential colony of the appellants - HELD THAT:- The issue in hand has been considered in the case of SANGHI INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAJKOT [2006 (4) TMI 422 - CESTAT, NEW DELHI] 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 of the appellant is not admissible. Appeal allowed in part - decided partly in favor of assessee. - E/13320, 13837/2013 & E/13476/2014-DB - FINAL ORDER NO.A/ 12150-12152 /2019 - 7-11-2019 - RAMESH NAIR MEMBER (JUDICIAL) AND RAJU MEMBER (TECHNICAL) Sh. Anand Nainawati (Advocate) for the Appellant Sh. L. Patra Authorized Representative for the Respondent ORDER The brief facts of the case are that the appellant are a lignite based cement manufacturing unit. The entire manufacturing unit consists of a clinker unit, a grinding unit, a captive power plant and a water desalination plant (DMW plant). Adjacent to the grinding unit is a captive .....

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..... pearing on behalf of the assessee submits that the issue involved in the present appeal stands decided by this Hon ble Tribunal vide Final Order dated 05.02.014 reported at 2014 (302) ELT 564 (Tri. Ahd.) wherein this Hon ble Tribunal for the prior period November 2003 to March 2007 has allowed Cenvat credit availed by the appellant on inputs used in the generation of electricity at the captive power plant and supplied to the grinding unit and captive jetty of the appellants. This Hon ble Tribunal however disallowed cenvat credit to the extent that electricity was supplied to residential colonies of the appellants and to the DMW plant to the extent that a part of the desalinated water was supplied to the Gujarat Water Board. He further submits that the department Appeal No. E/13476/2014 is not sustainable in any case. This appeal filed against Order-In-Appeal No.RJTEXCUS- 000-APP-89-14-15 dated 17.06.2014. In the said Order out of total demand of ₹ 80,30,798/- proposed in the show cause notices, the Ld. Commissioner (Appeals) has allowed Cenvat credit of ₹ 53,63,257/- pertaining to electricity supplied to the grinding unit and denied Cenvat credit of ₹ 26,67,541/- .....

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..... owever, certain quantity of electricity were used in the residential colony of the appellants, therefore, to the extent electricity and desalination water used in the factory of the appellant for manufacture of final product, jetty and administrative building they are eligible for Cenvat credit , however, the inputs/ inputs service attributed to the generation of electricity and desalination water used in residential colony is not admissible. Similarly, in the Revenue s appeal the only issue involved is that whether the Cenvat credit is admissible to the appellant on Furnace Oil and lubricating oils used in the generation of electricity by the captive power plant though at clinker units the same was used but part of the electricity generation was used by the appellant s the grinding units, therefore, the credit is admissible this issue is no longer res-Integra as both the issue were addressed by this Tribunal in the appellants own case which are extracted below:- Sanghi Industries Limited vs. C.C.E- Sanghi Industries Ltd-2014 (302) ELT 564 (T) 7. The issues involved in these appeals are the following : (i) Whether Cenvat credit of ₹ 9,87,045/- availed by the appellant; with r .....

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..... ricity sent to the sister concerns is not admissible for input credit. Appellant on the other hand has argued that all the units should be treated as the same factory as the transmission lines and roads linking these units are under the possession and control of the appellant. However, in view of the judgments relied upon by the Revenue, as mentioned in Para 5(b) above, such units situated far away cannot be treated as one factory once different registrations have been obtained by the appellant for all the three units. Hon. Supreme Court in the case of M/s. Rollatainers Ltd. v. CCE, Delhi-III (supra) laid the following law in Paras 7 & 8 of this judgment : 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 manufacturin .....

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..... . 521 (Mad.)] where the following observations were made by Madras High Court in Paras 17 and 18 : 17. The Learned Counsel for the assessee distinguished the judgment of the Supreme Court in Maruti Suzuki Ltd. v. Commissioner of Central Excise, Delhi-III - (2009) 9 SCC 193 = 2009 (240) E.L.T. 641 (S.C.) on the ground that the issue in the said judgment relates to the entitlement of credit on eligible inputs utilized in generation of electricity to the extent to which excess electricity cleared at the contractual rates in favour of sister units, 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 in spite 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 .....

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..... be cleared from the premises of the job-worker. 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 conditions. In the procedures prescribed under the Cenvat Credit Rules, 2004, therefore, provisions exist to allow the credit of inputs 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 .....

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..... ly denied to the appellant. 16. Based on the above observations, appeals filed by the appellants with respect to Cenvat credit taken on structural items (Para 15 above), electricity supplied to DMW plant used for supplying demineralized water to Gujarat Water Board (Para 8 above) and electricity, supplied to residential colonies of the appellant (Para 9 above) is rejected. Appeal of the appellant with respect to Credit of inputs used for generating and supplying electricity 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. C.C.E, Vs. Sanghi Industries Limited Final Order No. A/13456-13458/2017 dated 07.11.2017 6. I find that this issue has been considered by this Tribunal in their own case reported as Sanghi Industries Ltd. Vs. Commissioner of Central Excise, Rajkot 2014 (302) ELT 564 (Tri.-Ahmd.). After analyzing the provisions of law it is observed as follows:- 16.Based on the above observations, appeals filed by the appellant .....

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