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TMI Blog2007 (7) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... /GB. 3. Although several questions are raised in this appeal, the only argument advanced before us is regarding the availment of Modvat credit on the inputs used in the manufacture of electricity supplied to the residential complexes within the licensed premises. As there are conflicting decisions of the Tribunal, we admit the appeal on the following re-framed question of law :- "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is not entitled to input duty credit on furnace oil used for generation of electricity supplied to the residential colony of the employees of assessee situated within the precincts of the manufacturing area forming part of the premises licenced under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 1997 to 2002 and by the said show cause notices, the assessee was called upon to show cause as to why the said credit should not be recovered and penalty should not be imposed. The assessee replied to the said show cause notices by stating that the residential complexes are situated inside the factory and hence the assessee is entitled to avail the credit. 9. By a common order in original dated 25-7-2003, the Commissioner of Central Excise inter alia confirmed the demand for recovery of ineligible credit of duty and levied penalty of rupees 30 lakhs. 10. On appeal filed by the assessee, the CESTAT partially upheld the order passed by the Commissioner of Central Excise by confirming the demand but reduced the penalty to rupees five lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such premises or precincts. Relying on the decisions of the Apex Court in the case of Grauer and Weil (I) Ltd. v. CCE reported in 1994 (74) E.L.T. 481 (S.C.) and in the case of South Eastern Coalfields Ltd. v. CCE reported in 2006 (200) E.L.T. 357 (S.C.), Shri Nankani submitted that the words "premises and precincts thereof" under the Excise Law has to be given a wider meaning. Accordingly, Shri Nankani submitted that the residential complexes situated within the precincts in which the manufacturing activity is carried out would be covered by the definition of factory. 14. Shri Nankani further submitted that the definition of the term "factory" when read in conjunction with the provisions of Rule 57B, it becomes clear that the inputs use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dutiable goods directly or for any other purposes, the credit of duty paid on the inputs used in the generation of such electricity, cannot be denied. 16. Shri Nankani fairly stated that the decisions of the Tribunal in the cases of SAIL v. CCE reported in 2001 (137) E.L.T. 572 (T); SAIL v. CCE reported in 2001 (130) E.L.T. 459 (T); and Bhilwara Spinners Ltd. v. CCE reported in 2004 (177) E.L.T. 597 (T) support the contention of the revenue. However, he submits that the decision of the Tribunal in the case of SAIL reported in 2001 (137) E.L.T. 572 (T) was based on a concession and the said decision has been followed in the subsequent decisions of the Tribunal referred to herein above. Since the above decisions are based on the concessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2001 and Cenvat Credit Rules, 2002. During the period from 1997 to 2002 the electricity generated has been utilised by the assessee within the licensed premises for manufacture of final product and at the residential complexes. The question is, whether the assessee is entitled to the credit of duty paid on furnace oil used in the generation of electricity for supply to residential complexes situated within the licensed premises? 19. According to the assessee, the words "any other purpose" in Rule 57B(iv) is wide enough to cover supply of electricity to the residential complexes. In other words, the submission is that once it is established that the electricity manufactured from the duty paid furnace oil is used within the factory prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with or related to the production of the final products. In this view of the matter, we hold that the finding recorded by the Tribunal that the assessee is not entitled to the credit of duty paid on the furnace oil used in the generation of electricity supplied to the residential complexes cannot be faulted. 22. The decision of the Apex Court in the case of Grauer and Weil (I) Ltd. v. CCT (supra) and the case of South Eastern Coalfields Limited v. CCE (supra) relied upon by the assessee do not support their case. What is held in those cases is that the words "any premises including the precincts thereof" in Section 2(m) of the Central Excise Act are wide enough to cover any activity carried on within the licensed premises. In both the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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