Custom, Excise & Service Tax Tribunal
Klj Plasticizers Limited vs C.C.E.Cus & S.Tax, Vapi on 27 December, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, 2nd Floor, Bahumali Bhavan, Asarwa, Ahmedabad Central Excise Appeal No.13377, 13378, 13379, 13380 of 2014-SM Arising out of the Order-in-Appeal No.VAP-EXCUS-000-APP-142 & 143-14-15 and No. VAP-EXCUS-000-APP-144 & 145-14-15 both dated 10.7.2014 passed by the Commissioner (Appeals), Central Excise, Vapi. KLJ Plasticizers Limited .. Appellants B.B. Mohanty Vs. C.C.E.Cus & S.Tax, Vapi .. Respondent
Appearance:
Present Shri J. Surti, Advocate for the Appellants Present Shri K.J. Kinariwala, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing/decision:27.12.2017 Final Order No.A/13857 - 13860/2017 Per Dr. D.M. Misra:
Heard both sides.
2. These four Appeals are filed against the Orders-in-Appeal No.VAP-EXCUS-000-APP-142 & 143-14-15 and No. VAP-EXCUS-000-APP-144 & 145-14-15 both dated 10.7.2014 passed by the Commissioner (Appeals), Central Excise, Vapi.
3. Briefly stated the common facts in these Appeals are that boiler and parts of the boiler of the Appellant were installed in Unit II, used for generation of electricity and exclusively used in their Unit I where Cenvat Credit has been availed. Alleging that the credit availed at Unit I not admissible, show cause notice was issued for recovery of the credit amounting to Rs.4,53,303/- and Rs.3,19,403/- with interest and penalty. On adjudication, the demand was confirmed with interest. Aggrieved by the said order, the Appellant filed Appeal before the ld. Commissioner (Appeals), who in turn, rejected their Appeals. Hence, the present Appeals.
3. Ld. Advocate, Shri Jagdish Surti for the Appellant submits subsequent to the present demand notice on the application made by the Appellant, they received centralized registration for both the units from 26th April 2013. It is his contention that whatever electricity generated in their Unit II had been captively consumed in their Unit I and the issue is covered by the judgment of this Tribunal in the case of OPG Metals Pvt. Ltd. vs. C.C.E., Trichy 2016 (344) ELT 990 (Tri-Chennai). Further, the ld. Advocate submits that on the issue of credit on inputs namely, coal used in the boiler, the Tribunal in their own case vide Order No.A/13565/2017 dated 20.11.2017 allowed the credit.
4. Ld. A.R. for the Revenue reiterates the findings of the ld. Commissioner (Appeals).
5. I find that the issue is covered by the judgment of this Tribunal in OPG Metals Pvt. Ltd. (supra) in similar facts and circumstances. After analyzing the principle of law, this Tribunal has observed as follows:
6.?The short-question for decision is whether or not the appellants are eligible for Cenvat credit on capital goods in respect of boilers and others procured by the appellant and used for generation of electricity using the waste heat recovery process of already existing generator sets in the premises of the sister Unit. The admitted facts of the case are that the capital goods have been procured on payment of duty by the appellants. They have been put into use for generation of electricity in Waste Heat Recovery System. The electricity so generated is indisputably used by the appellant in their manufacturing process. These being admitted facts, Revenues case that the capital goods are installed in the adjacent premises of sister concern who are engaged in power generation, cannot be valid reason for denial of such credit. It is seen that the capital goods now in dispute are for generation of electricity out of Waste Heat Energy System which arise out of three generator sets using natural gas as fuel. The exhaust heat given out during the course of production of electricity in these generators is being used by the Waste Heat Recovery Power Plant. It necessarily follows that such Waste Heat Recovery Power Plant is to be integrated to the original power generation process, so that waste energy by way of exhaust can be put into beneficial use of further power generation. Keeping these factual details in mind, we find no justification to deny the credit on these capital goods only on the ground that these are installed in the premises of sister Unit.
7.?Honble Supreme Court in the case of Vikram Cement v. Commissioner of Central Excise, Indore reported in 2006 (194) E.L.T. 3 (S.C.) examined the terms within the factory of production, though in connection with entitlement of credit for inputs. The Honble Supreme Court held that the term means only such generation of electricity or steam which is used within the factory would qualify as an intermediate product. In Steel Authority of India Ltd. v. Commissioner of Central Excise, Bhubaneswar reported in 2007 (219) E.L.T. 960 (Tri.-Del.), the Tribunal held that mere location of capital goods outside the factory premises is no ground for denying the credit. In Commissioner of Central Excise, Nagpur v. Indorama Textiles Ltd. reported in 2010 (260) E.L.T. 382 (Bom.), the Honble Bombay High Court held that when the electricity is used as intermediate goods in the manufacture of final product such electricity can be obtained from outside source also.
8.?We note that the department has not disputed the duty-paid nature of the capital goods, discharge of duty by the appellant, usage of capital goods for generation of electricity and consumption of such electricity by the appellant in the manufacture of dutiable final products. In these factual matrix, we find no justification to deny the credit on the capital goods availed by the appellant. Accordingly, the impugned order is set aside, the appeal is allowed.
Following the aforesaid precedent, the impugned order is set aside and the Appeals are allowed with consequential relief, if any, as per law.
(Dr. D.M. Misra) Member (Judicial scd/ 5 E/13377 to 13380/2014-SM 5