TMI Blog2024 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of cement and form part of the same group of companies. They admittedly hold separate licenses for manufacture and are independent assessees - the facts that the power in this case has not been sold for consideration and has only been shared with the sister units will be a relevant consideration. Importantly, a distinction has been envisaged between the goods used 'in the factory' by the 'manufacturer of the final product' and the goods used for 'generation of power'. While the former insists that the goods must be used 'in the factory' , there is no stipulation of place as regards the goods in clause (iii). Therefore, there are merit in the position that electricity captively generated is an input, wherever used by the assessee concerned. The use of the term captive is, in our view a qualification of the location where it is generated and not of the location where it is used. The appellant must succeed on the specific fact pattern as arising in this appeals. These appeals are allowed. - Honourable Dr.Justice Anita Sumanth And Honourable Mr.Justice R.Vijayakumar For the Appellant : Mr.N.Sri Prakash for Mr.S.P.Maharajan For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the power consumed captively and wheeled out through the grid. 6. The Department had relied upon the judgment of the Hon ble Supreme Court in the case of Maruthi Suzuki Ltd V. Commissioner of Central Excise, Delhi 2009(240) ELT 641(SC) and the Appellant distinguished the same on facts. The Appellant relied instead upon a decision in Commissioner of Central Excise, Chennai V. M/s. SRF 2013(298) ELT 521 (Mad.) of this Court as well as several decisions of the CESTAT in support of their entitlement to the entire credit of duty paid on inputs irrespective of the admitted position that a portion of the power have been transferred to their sister units located elsewhere. 7. In any event, and by way of abundant caution, the appellant reversed the proportionate credit towards inputs and input service, attributable to the value of the power transferred to the sister units without prejudice to their right of claiming the same as refund in accordance with law. The details of credit reversed and the periods are as follows: Sl. No Date of Refund Claim Period Refund Amount Involved (In rupees) SCN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. After a detailed consideration of the matter, the proposals under the show cause notice were confirmed as were the demands of duty, interest and penalty. Parallel with these proceedings, the appellant had sought refund of the credit reversed for the periods (i) September 2012 to May 2013 (ii) June 2013 to November 2013 (iii) December 2013 to October 2014 (iv) November 2014 to July 2015 (v) August 2015 to January 2016. Show cause notices came to be issued proposing to reject the prayer for refund. 10. The appellant replied to the show cause notices reiterating their entitlement of refund relying on the ratio of several cases. Orders came to be passed confirming the proposal to disallow the claim for refund as against which first appeals were filed, that met the same fate. 11. Appeals came to be filed before the CESTAT challenging order-in-original dated 08.12.2014 as well as the order of the first appellate authority confirming the rejection of refund that were dismissed, as against which order the present five appeals have been filed. 12. The submissions of the appellant revolve around the fact that electricity qualifies as an input for the grant of CENVAT credit und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricity or steam used for manufacture of final products or for any other purpose, within the factory of production. 17. The above definition is what had come up for consideration in the case of Maruti Suzuki Ltd. (supra), referred to in extenso by both parties. The definition contains three parts, as amplified by the Bench in that case . The first component relates to the description of the goods that would qualify as input and is wide and inclusive. The second component relates to the use of those inputs as aforesaid in manufacture. The dispute arises from the reference to place of use , which is the third component of the definition. 18. The issue considered in that case was the reversal of CENVAT credit proportionate to the extent of power wheeled out by the appellant to its sister units, vendors and joint ventures in terms of Rule 2(g) of the CCR 2002. Maruti Suzuki Ltd., engaged in the business of manufacturing motor vehicles, had installed gas turbines in their factory for generation of electricity of 20 Megawatts each. 19. Till June 2002 as that assessee was using natural gas as fuel for running turbines, there was no excise duty liability and thus, the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arrangement and the requirement is for carrying out the manufacturing activity, the electricity generation also forms part of the manufacturing activity and the input used in that electricity generation is an input used in the manufacture of final product. However, to the extent the excess electricity is cleared to the grid for distribution or to the joint ventures, vendors, and that too for a price (sale) the process and the use test fails. In such a case, the nexus between the process and the use gets disconnected. In such a case, it cannot be said that electricity generated is used in or in relation to the manufacture of final product, within the factory . Therefore, to the extent of the clearance of excess electricity outside the factory to the joint ventures, vendors, grid etc. would not be admissible for CENVAT credit as such wheeled out electricity, cleared for a price, would not fall within the definition of input in Rule 2(g) of the CENVAT Credit Rules, 2002. This view is also expressed in para 9 of the judgment of this Court in the case of Collector of Central Excise v. Solaris Chemtech Limited - (2007) 214 ELT 481 (SC). Further, our view is supported by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual scenario where the power was sold to other units and whether, in such circumstances, such sale would qualify for the claim of CENVAT credit. 28. In the present case, the electricity has not been sold but has been supplied though wheeling by TANGEDCO to sister units located elsewhere. All units are engaged in manufacture/grinding of cement and form part of the same group of companies. They admittedly hold separate licenses for manufacture and are independent assessees. In our considered view, the facts that the power in this case has not been sold for consideration and has only been shared with the sister units will be a relevant consideration. 29. That apart, the judgment relates to an interpretation of the term input in regard to production during the period July 2002 and December 2002. The definition of input taken into account was with reference to the definition that was applicable then and with reference to transactions at the relevant point time. However, the definition of input stood substituted w.e.f. 01.04.2011 vide Notification 3/2011-C.E.(N.T), dated 01.03.2011 with effect from 01.04.2011, reading thus:- (k) input means- (i)all goods used in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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