Customs, Excise and Gold Tribunal - Tamil Nadu
The Madras Aluminium Co. Ltd. vs Commissioner Of Central Excise on 24 May, 2006
Equivalent citations: 2006(110)ECC348, 2006ECR348(TRI.-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. The subject appeal filed by M/s The Madras Aluminium Co. Ltd., (MALCO) Mettur, accompanied by an application for waiver of predeposit and stay of recovery is against Order-in-Appeal No. 186/2005-CE [SLM] dated 10.11.2005 sustaining the order of the lower authority requiring MALCO to pay Rs. 6,025/- under Section 11A of the Central Excise Act and appropriate interest under Section 11AB ibid. After hearing both the ld. Consultant the ld. SDR, the appeal itself is taken up for disposal. The amount demanded is inadmissible credit taken on inputs used in the generation of steam which was subsequently converted into electricity and supplied to Tamil Nadu Electricity Board (TNEB) grid outside the factory. The assessee had taken credit on Petroleum Coke, SKO and various chemicals for generation of steam, which is used in the manufacture of electricity. In the Order-in-Appeal, as regards the inputs relatable to electricity supplied to TNEB, the Commissioner took the stand that "the fuel used for generation of electricity and the power so supplied to TNEB grid would not be considered as inputs used within the factory of production". Inputs relatable to surplus power fed into TNEB grid would not be considered as inputs used in the manufacture of final products in view of the restriction of the usage of inputs "within the factory of production".
2. The subject dispute involves interpretation of Rule 2(g) of the CENVAT Credit Rules, 2002 as per which, "inputs" means all goods, except [light speed oil], high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final products or not, and includes lubricating oils, greases, cutting oils and coolants and accessories of the final products cleared along with the final product, goods used as paint, or as packing material or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production." It is seen that eligibility of credit relating to electricity supplied outside the factory from steam generated using the inputs within the factory was considered by the Tribunal in Gujarat Narmada Fertilizers Co. Ltd. v. Commissioner of Central Excise Vadodara 2004 (176) E.L.T.200 (Tri.-Mumbai). In that case, it was decided that credit was permissible on LSHS (Fuel) as long as the same was used in the manufacture of steam, which was used in the factory. Steam was used in the manufacture of fertilizers, chemicals as well as for generation of electricity. It was held that all the three uses were in the factory and what happened to the electricity manufactured from the steam was not relevant. Department had filed a reference application against the above order of the Tribunal. In Commissioner of Central Excise & Customs v. Gujarat Narmada Fertilizers Co. Ltd. 2006 (193) E.L.T.136 (Guj.). the Hon'ble High Court upheld the above finding of the Tribunal as correct. This judgment was followed by the Division Bench of the Tribunal at Bangalore in Sudalagunta Sugars Ltd. v. Commissioner of Central Excise, Tirupathi.
3. I have carefully considered the submissions of both sides. In view of the judgment of Gujarat High Court to the effect credit has to be allowed on all the inputs if the steam generated with them is used within the factory for any purpose, the appeal of MALCO has to be allowed. Accordingly I allow the appeal with consequential relief .
(Dictated and pronounced in open Court)