TMI Blog2007 (7) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the factory premises are neither connected with or related to the production of the final products - appeal dismissed. - 30 of 2006 - - - Dated:- 6-7-2007 - J.P. Devadhar and B.P. Dharmadhikari, JJ. [Judgment per : J.P. Devadhar, J.]. - Heard Shri V.S. Nankani, the learned Counsel appearing on behalf of the appellant-assessee and Shri S.K. Mishra, the learned Assistant Solicitor General appearing on behalf of the respondent. 2. This appeal is filed by the appellant-assessee under Section 35G of the Central Excise Act, 1944 (Act for short) against the order of CESTAT dated 25th January, 2006/20th February, 2006 in Appeal No. A/334/WZB/06/C-1/GB. 3. Although several questions are raised in this appeal, the only argument adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -manufacturing activities. 8. On receiving information that the assessee is utilising credit of duty paid on furnace oil used for generation of electricity, which, in turn, is supplied to the residential complexes, the Excise Officers visited the factory of the assessee on 28/29-1-2002. On inspection of the books and recording statements of various employees, two show cause notices dated 06-3-2002 and 10-2-2003 were issued alleging that the assessee has willfully and wrongfully availed and utilised ineligible credit of duty on furnace oil consumed for manufacture of electricity generated in the power plant for supply to residential complexes during the period from 1997 to 2002 and by the said show cause notices, the assessee was called up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production." 13. Shri Nankani, the learned Counsel for the assessee submitted that in the present case, substantial quantity of the electricity generated has been used in the manufacture of final products and roughly about one per cent of the electricity generated has been supplied to the residential complexes situated within the licensed premises. He submits that the word "factory" defined under Section 2(e) of the Act is wide enough to cover any premises or precincts thereof, even if the manufacturing activity is carried out only in a part of such premises or precincts. Relying on the decisions of the Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y supplied to the residential complexes situated within the factory premises would be covered within the meaning of the words "any other purpose" set out in Rule 57B(iv) of the Central Excise Rules, 1944 and consequently credit of duty paid on inputs namely furnace oil used in the generation of electricity supplied to the residential complexes would be available to the assessee. 15. Shri Nankani further submitted that it is not in dispute that the residential complexes of the assessee are situated within the licensed premises approved by the Central Excise Authorities. He submits that where the electricity is used within the factory premises, whether for production of the dutiable goods directly or for any other purposes, the credit of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts used in the generation of electricity would not be available. In the present case, since the supply of electricity to the residential complexes is neither connected with nor related to the intermediate product or the final product, the assessee is not entitled to the credit of duty paid on inputs. Accordingly, Shri Mishra submitted that there is no merit in the appeal and the same is liable to be dismissed. 18. We have carefully considered the rival submissions. The basic dispute in the present case revolves on the meaning of the word "any other purpose" contained in Rule 57B(iv) of the Central Excise Rules, 1944 as well as similar Rule contained in the Cenvat Credit Rules, 2001 and Cenvat Credit Rules, 2002. During the period from 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the machinery used in the production of the final products, it would be covered within the meaning of the word "any other purpose" in Rule 57B(iv) of the Central Excise Rules, 1944. 21. The fact that the residential complexes are situated within the licensed premises would not entitle the assessee to avail credit of duty paid on furnace oil used in the manufacture of electricity supplied to the residential complexes. It is necessary to establish that the electricity is used for any purpose connected with or related to the production of final products. In our opinion, supply of electricity to the residential complexes situated within the factory premises are neither connected with or related to the production of the final products. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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