TMI Blog2019 (11) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... meant only for supply of power to the grid. There is nothing on record to show that PPA entered into has been modified and the clause requiring TG-2 to be in an island (isolated) mode has been modified to enable it to be interconnected with the sugar plant for use in the manufacture of sugar. Considering the contradictory pieces of evidence both made available by the appellant, it is found that the PPA is more authentic document. Even if the appellant has connected TG-2 with their sugar plant, for a short time in violation of the agreement, that does not make it capital good used in manufacture of sugar. There is also no evidence to substantiate that during the short interval when such connection is made, whether any excisable products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rid and is isolated from TG-1. They have entered into a Power Purchase Agreement (PPA) with the Transmission Corporation of Andhra Pradesh Ltd (APTRANSCO) for selling power from TG-2. The appellant had taken Cenvat credit of capital goods on both TG-1 and TG-2. A show cause notice dt.29.09.2006 was issued to the appellant seeking to deny Cenvat credit on both TG-1 TG-2. After following due process, Cenvat credit on TG-1 was allowed by the original authority by Order-in-Original dt.08.06.2012 but they were denied Cenvat credit on TG-2. On appeal, this bench had remanded the matter back to the original authority which was adjudicated by the impugned order dt.03.09.2018. In this order, after considering all the submissions made by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the capital goods viz., TG-2 for manufacture of final products viz., sugar it is immaterial to what extent they have used the capital goods for this purpose and to what extent for production of electricity for sale to the grid. The only exclusion under Rule 6(4) is to capital goods which are used exclusively in the manufacture of exempted products. She would submit that as the power generation logs would show that they have connected TG-2 in some cases where TG-1 failed, to the sugar plant. Therefore, they are entitled for Cenvat credit. She relies on the following case laws: a. UOI vs HEG Ltd [2012 (275) ELT 316 (Chattisgarh)]. b. JSW Steel Coated Products Ltd vs CCE, Thane-II [2016 (43) STR 280 (Tr-Mumbai)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining circuit and has to be aligned with the grid. He would draw the attention of the bench to Paras 3, 4, 2.2 and 2.5 of the agreement and Schedule-1 Schedule-2B of the agreement which reads as follows: 3. APERC while issuing permission for Captive consumption in O.P.Nos.92 299/2000 dt.27.7.2002 indicated that utilisation of power to be generated from one 7 MW TG set to be run continuously in independent (Island) mode for Captive use and sell power from the second 7 MW TG set to the licensee as per PPA between the applicant and the licensee. 4. The Company also confirmed that the 2 Nos. 7 MW TG sets are electrically isolated and the maximum export to grid from second Turbo Generator set is 6.25 MW only. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He would therefore, submit that TG-2 was meant exclusively for production of electricity for sale to the APTRANSCO. Electricity being an exempted product, no credit of capital goods can be availed on the same. He also disputed the submission of the appellant that TG-2 is also meant for running the plant to manufacture sugar. He would submit that even if some generation logs have been maintained by the appellant with some foot notes signed by the employees of the appellant indicating TG-2 has been used for running the plant, this is contradictory to the authentic documents viz., PPA entered into between the appellant and the APTRANSCO. Therefore, he would urge that the appellant is not entitled to the Cenvat credit of capital goods on TG-2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has connected TG-2 with their sugar plant, for a short time in violation of the agreement, that does not make it capital good used in manufacture of sugar. There is also no evidence to substantiate that during the short interval when such connection is made, whether any excisable products have been manufactured. In view of these facts, I find that appellant is not entitled to Cenvat credit of capital goods on TG-2 set. 8. I have also considered the various case laws relied upon by the appellant. In all these cases, the dispute was that if the capital goods are used both for manufacture of final products and for manufacture of exempted products whether Cenvat credit on capital goods is admissible or otherwise. For inst ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
