Custom, Excise & Service Tax Tribunal
Ultratech Cement Ltd vs C.C.E & S.T., Bhavnagar on 22 December, 2017
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, 2nd Floor, Bahumali Bhavan, Asarwa, Ahmedabad Central Excise Appeal No.12693 of 2014 -SM Arising out of the Order-in-Appeal No.BVR-EXCUS-000-APP-05-14-15 dated 29.4.2014 passed by the Commissioner (Appeals), Central Excise and Customs, Bhavnagar. Ultratech Cement Ltd .. Appellants Vs. C.C.E & S.T., Bhavnagar .. Respondent-Revenue
Appearance:
Present Shri Anand Nainawati, Advocate for the appellants Present Shri S. Satwani, A.R. for the Respondent-Revenue Coram: Honble Dr. D.M. Misra, Member (Judicial) Date of hearing: 07.09.2017 Date of pronouncement: 22.12.2017 Final Order No.A/13854/2017 Per Dr. D.M. Misra:
Heard both sides. This is an Appeal filed against the Order-in-Appeal No. BVR-EXCUS-000-APP-05-14-15 dated 29.4.2014 passed by the Commissioner (Appeals), Central Excise and Customs, Bhavnagar.
2. Briefly stated the facts of the case are that the Appellant had availed CENVAT credit on Naphtha which is used in their factory for generation of electricity and a part of such electricity so generated had been wheeled out to their sister unit. Alleging that the entire quantity of electricity generated out of Naphtha not used in the factory premises, hence proportionate credit of Naptha amounting Rs.1,04,371/- used in the generation of electricity wheeled outside the factory during the period January 2005 to November 2005 has been demanded with interest and penalty. On adjudication, the said demand was confirmed with interest and penalty. Aggrieved by the said order, the Appellant filed Appeal before the ld.Commissioner (Appeals), who in turn , rejected their Appeal. Hence, the present Appeal.
3. The ld. Advocate Shri Anand Nainawati for the Appellant has submitted that Naphtha used as fuel for generation of electricity in gas generator plant had been used in their factory for production of excisable product. During the course of generation of electricity in gas generation, waste heat/exhaust gas is generated which was earlier vented out but later used by the Appellant in their steam turbine for generation of electricity through steam and the same, in turn, is used in their steam turbine which generates electricity and used within the factory of production. A portion of the said electricity so generated wheeled outside the factory. He submits that waste heat generated being inevitable and thus used in generation of electricity in steam turbine plant. Therefore, the CENVAT credit availed on Naphtha attributable to the generation of waste heat/steam is not required to be reversed. In support, he refers to the judgment of Honble Supreme Court in the case of UOI vs. Hindustan Zinc Ltd. -2014 (303) ELT 321 (SC). Further, he has submitted that even if the credit on Naphtha used in generation of steam, which in turn, used in generation of electricity wheeled outside the factory premises not admissible, penalty cannot be imposed in view of the judgment of the Honble Supreme Court in the case of Maruti Suzuki Ltd. vs. C.C.E. 2009 (240) ELT 641 (SC).
4. Per contra, the ld. A.R. for the Revenue submits that there is no dispute of the fact that Naphtha has been used in generation of waste heat/steam which in turn used in their steam turbine for generation of electricity, also a portion of electricity is wheeled outside the factory, thus, the ld. Commissioner (Appeals) has rightly followed the judgment of the Honble Supreme Court in the case of Maruti Suzuki Ltd. in confirming the denial of the credit on the Naphtha used for generation of electricity wheeled outside the factory. He has further submitted that the judgement of the Honble Supreme Court in Hindustan Zinc Ltd.s case is not applicable to the facts of the present case inasmuch as, the issue involved in the said case was: whether 8% of the value of the exempted sulphuric acid generated as by-product is required to be paid under Rule 57CC of erstwhile Central Excise Rules,1944.
5. Heard both sides and perused the record. I find that the issue of eligibility of CENVAT credit on the quantum of Naphtha used in generation of steam which in turn used for generation of electricity in the factory premises and wheeled out to their sister concern is squarely covered by the judgment of the Honble Supreme Court in the case of Maruti Suzuki Ltd.s case (supra). Therefore, the Appellants are not eligible to the credit on Naphtha used for generation of electricity wheeled outside the factory as held by the ld. Commissioner (Appeals) in the impugned order. However, I find force in the contention of the ld. Advocate for the Appellant regarding imposition of penalty. While confirming denial of credit , the Honble Supreme Court in Maruti Suzuki Ltd.s case (supra) observed that due to conflicting views on the issue, imposition of penalty is uncalled for. Following the same , penalty imposed on the Appellants is set aside. The impugned order is modified to this extent. The Appeal is partly allowed as mentioned above.
(Pronounced in the open Court on 22.12.2017) (Dr.D.M. Misra) Member (Judicial) scd/ E/12693/2014-SM 4