Partly allowed

Commissioner of Central Excise Rohtak v. M/S Jindal Stainless Ltd.

Punjab & Haryana HC28 Jan 2025CEA/84/2009

Case brief

AI extract

What is this about?

The High Court examined an appeal regarding the disallowance of duty credit on fuel used for captive power generation. The Court found the Tribunal failed to decide the crucial issue of whether exported electricity was actually used for manufacturing. The appeal was allowed by remanding the matter to the Tribunal for this specific decision.

What did the court decide?

The appeal was allowed by remanding the matter to the Customs, Excise & Service Tax Appellate Tribunal to decide the dispute regarding whether the electricity generated and exported was actually used

Commissioner of Central Excise… — Civil Procedure and Limitation | Punjab & Haryana HC (2025)

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CEA-84-2009 (O&M) - 1-

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201

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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CEA-84-2009 (O&M) Reserved on :- 07.01.2025 Date of Pronouncement:28.01.2025

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Commissioner o f Central Excise, Commissionera t e Rohtak

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....Appellant

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VERSUS

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M/s Jindal Stai n less Ltd. ....Respondent

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CORAM : HON'BLE MR. JUSTICE ARUN PALLI HON’BLE MRS. JUSTICE SUDEEPTI SHARMA

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Present: M r . Sunish Bindlish, Advocate an d M r . Viney Kumar, Advocate for th e appellant.

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M r . Ankit Awal, Advocate for the r espondent.

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SUDEEPTI SHARMA, J.

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Th e present appeal is preferred by the Commissioner of Ce n tral Excise, Commi s sionerate, Rohtak, under Secti o n 35(G) of the Central Excise A ct, 1944, against t h e order dated 21.08.2008 passe d by the learned Customs, Excis e & Service Tax Ap p ellate Tribunal, New Delhi.

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Th e brief facts of the case as p er the Order-in-Original and the relevant portio n of the findings are reproduced a s under:-

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“ M/s Jindal Strips Ltd., Delh i Road, Hisar (hereinafter refe r red to as the Party) are engaged in t he manufacture of goods suc h as Sl a bs, Blooms, Ingots, HR Strips/ C oils of Stainless Steel etc. fal l ing un d er Chapter 72 of the Centra l Excise Tariff Act, 1985 and are re g istered with the Central E x cise vide Registration Nu m ber

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CEA-84-2009 (O&M) - 2-

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AA B CJ1969MXM001. The party a re availing the Modvat/CEN V AT Cr e dit facility of duty paid on inpu t /raw materials and Capital Go o ds. Th e party have installed a capti v e power plant for generatio n of ele c tricity using fuel namely, R. O ., R.F.O, H.P.S. and L.D.O. on which they are taking Modvat/C E NVAT credit under Rule 57A a nd 57 B of the Central Excise Rules, 1944, Rule 2 and 3 of CEN V AT Cr e dit (No.2) Rules, 2001 and Ru l e 2 and 3 of CENVAT Credit R u le, 20 0 2.

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2. Acting on an intelligence t hat the said party ware clea r ing so m e part of electricity generate d by their Captive Power Pla n to El e ctricity Board the Haryana Sta t e (HSEB) ((now Dakshin Hary a na Bijli Vitran Nigam Ltd. (DHBVNL ) ) an enquiry was conducted by the of fi cers of Central Excise. The p a rty produced the permission l e tter M e mo No.210/DB- 33 (3)85/Ji n dal Strips/Hisar dt 1-10-90 the Se c retary, Technical Section, H SEB, Panchkula (Haryana) for pa r allel operation of their Capti v e Power Plan with HSEB, Po w er Gr i d. On scrutiny of the Permission Letter it was observed by the Ce n tral Excise officers that as per Clause0II of the Permission Le t ter, th e Captive Power Plant was sy n chronized with the HSEB Po w er Gr i d on 11KV. Further as per t he agreement the party provi d ed Ex p ort/Import Meters on 11KV b u s for recording power injecte d by th e ir Captive Power Plant to th e HSEB system and power dr a wls fro m HSEB system respectively. T he party had been clearing s o me EB pa r t of the power generated by t h eir Captive Power Plant to H S

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CEA-84-2009 (O&M) - 3-

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an d not reversing the proportiona t e Modvat/CENVAT credit take n on th e fuel which was consumed by t h em for the generation of electri c ity ex p orted to HSEB.

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3. The SDO (DHBVNL), HSE B (the AEE"OP" S/D, Model T o wn (D H BVNL) Hisar submitted the st a tement of power purchased/sol d in res p ect of M/s Jindal Strips Ltd., Hisar for the period 1991-9 2 to 20 0 3-04 (upto June, 2003). The A E E "OP" S/D, Model Town, H i sar further clarified vide letter dt. 30- 0 7-03 that the power purchase d by th e HSEB now Nigam, i.e. the pow e r ejected by M/s Jindal Strips L td., Hi s ar in their system, was meas u red by the export meter and the Ni g am had not been making any c a sh payment for the units purch a sed by Nigam from M/s Jindal Strip s Ltd., Hisar. However, the u n its cle a red/injected by M/s Jindal Str ip s Ltd., Hisar in their system w ere ad j usted in the monthly electrici ty bills at the same rate at w h ich Ni g am sold to M/s Jindal Strips Lt d ., Hisar after deducting 10% o f the tot a l cleared units/injected by M /s Jindal Strips Ltd. Hisar in t h eir system.

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4. Shri Arun Goel, Vice Presi d ent of the Party in his volun t ary statement dated 24- 07-2003 und e r Section 14 of the Central Ex c ise Ac t , 1944 stated that he was w o rking as Incharge of Electri c ity M a intenance and admitted that t h e power cleared/injected by t h eir Ca p tive Power Plant to HSEB syst e m was measured by Export M e ter. On 21-8-03 he submitted the d a ta sheet for fuel consumptio n in Ca p tive Power Plant for the perio d from April, 2001 to March, 2 0 03

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CEA-84-2009 (O&M) - 4-

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an d he further stated that the fue l consumption report in respec t of Ca p tive Power Plant before April, 2 001 was not available with hi m . 5. Shri R.K. Gupta, General M anager (Excise) of the Party in his vo l untary statement dated 24-07-2 0 03 under Section 14 of the Cen t ral Ex c ise Act, stated that they were using F.O., R.F.O. and L.D.O. for ge n eration of power and after 1- 3 -03 the L.D.0. was not used a nd als o stated that they were taking M odvat/CENVAT Credit on fuel for ge n eration of power used in their C aptive Power Plant for genera t ion of p ower. On 28-07-2003 he state d that the power cleared/injecte d in H SE B system was adjusted in the M onthly Electricity Bill. On 21- 8 -03 he stated that they were taking CENVAT credit on fuel used for ge n eration of power and for othe r purpose in the factory. He fur t her stated that the price of the fuel use d in the generation of the electri c ity mi g ht be taken on average basis a s they were making oil consump t ion re p ort as total oil used and not ite m wise. 6. Vide their letter dt. 9-10-0 3 the Party submitted the total f uel re c eived in their factory and Mo d vat/CENVAT credit taken on the sa m e for the period Jan., 99 to J une, 03. In his further volun t ary wr i tten statement dated 21-10-20 0 3 Shri R.K. Gupta admitted t hat th ey were taking Modvat/CENVA T credit on the entire fuel use d in th e ir Captive Power Plant for generation of electricity. I t is ch a racteristic of the Electricity th a t Electricity cannot be stored a nd als o the Electricity once cleared c a nnot be brought back.

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CEA-84-2009 (O&M) - 5-

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7. As per the provisions of Ru l e 57B of the Central Excise R u le, 19 4 4, 57AA of the Central Excise (2nd amendment) Rules, 2000 a nd Ru l e 2(f) of CENVAT Credit (No. 2 ) Rules, 2001 and Rule 2(g) o f the Ce n vat Credit Rule, 2002, a man u facturer of the final product s h all be allowed to take the credit of th e specified duty paid on inputs u sed for generation of electricity or st e am used for manufacture of fi nal pr o duct or any purpose, within t h e factory of production. Howe v er, on scrutiny of the records of the P arty it was revealed that they have be e n clearing/injecting some port i on of the electricity generate d by th e ir Captive Power Plant to H S EB and thereby contravened the pr o visions of the aforesaid Rules b y not using electricity generate d by usi n g inputs for the specified pur p ose on which the party had taken M o dvat/Cenvat credit. As such fu e l used for generation of electri c ity an d the electricity diverted/cleare d outside the factory is not cov e red un d er the purview of eligible i n puts defined under Rule 57A of Ce n tral Excise Rules, 1944, Ru l e 57AB of Central Excise ( 2 nd amendment) Rules, 2000 and Rul e 2 of CENVAT Credit Rules, 2 0 01 an d 2002 applicable during the r elevant period and as such cr e dit ta k en and utilized on fuel used for t he purpose other then the speci f ied is r ecoverable.

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8. It was observed that:

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(i) the party had contravene d the provision of Rule 57A, 57 B of Central Excise Rules 1944, 5 7AB, 57AA of Central Excise (2 nd amendment) Rules, 2000 a n d Rule 2 and 3 of the CEN V AT

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CEA-84-2009 (O&M) - 6-

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Credit Rules, 2001 and 200 2 and thereby availed inadmiss i ble Modvat/CENVAT credit to t h e tune of Rs. 4,22,06,993/- for the period Jan., 1999 to June, 2003 on fuels used for generatio n of electricity cleared to HSEB (now DHBVNL) and the same w as recoverable from them.

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(ii) The Party had suppress e d these facts from Department t hat they were clearing/injecting the part of electricity generate d by the Captive Power Pl a n (by using fuel on w h ich Modvat/CENVAT credit ha d been taken and utilized) to HS E B. This fact of clearance of ele c tricity to HSEB came to light o nly after the records were scrut i nized by the Central Excise Of fi cer which was detected after go i ng through the discrete inquiry a nd verification of documents w hich were not submitted by the Party to the Deptt. It appe a red that this act of omission a nd commission of the Party tantmounted to suppression of f a cts from the Department and t h e provisions of Rule 571(1) (ii ) of Central Excise Rules, 1944, Rule 57AH (2) of Central Ex c ise (2nd amendment) Rules, 20 0 0 and proviso to Section 11A (1 ) of Central Excise Act, 1944, w e re attracted wherein period of f ive years is invoke-able against the party. (iii) Shri R.K. Gupta, Gen e ral Manager (Excise) Incharg e of Central Excise matter of th e Company dealing with day to d ay affairs of the Party was ex p ected to inform this fact of u s ing fuel in the generation of the electricity being exported to H S EB

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CEA-84-2009 (O&M) - 7-

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(now DHBVNL) and to re v erse the Modvat/ CENVAT Cr e dit taken on that portion of fu e l.. He had failed in his duty a nd rather intentionally did no t take action as stated above w ith intent to evade Central Excise duty by way of ta k ing inadmissible Modvat/CENV A T credit. He, thus, appeared li a ble to penal action under Rule 209A of the Central Excise Rules, 1944 and Rule 13 of CENV A T Credit Rules.”

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Th e show cause notice was issue d to the respondent and they f i led

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reply to the sa m e.

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Af t er considering the reply and after giving personal hearing the learned Commi s sioner held as under:-

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“1 3 . From the above the followi n g undisputed facts have emer g ed. Th e Party have installed a capt i ve power plant for generatio n of ele c tricity and they are using F.O. , R.F.O., H.P.S. and L.D.O. as f uel in the D.G. sets installed for this purpose and are avai l ing M o dvat/Cenvat credit on F.O., R. F .O., H.P.S. and L.D.0. They have en t ered into an agreement da t ed 1.10.90 with Haryana S t ate El e ctricity Board (HSEB) for para l lel operation of the Captive Po w er Pl a nt by virtue of which their pla n t was synchronized with the H S EB Po w er Grid. They cleared some p a rt of the power generated by t h eir Ca p tive Power Plant to HSEB. T h e party was also using the po w er su p plied by the HSEB on payment. The power exported to HSEB f r om th e ir plant was adjusted in the bill raised by HSEB after deduc t ing 10 % wheeling charges.

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CEA-84-2009 (O&M) - 8-

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14. The allegations made b y the department are t hat M o dvat/CENVAT Credit availed o n the fuels used in the generatio n of ele c tricity, cleared by the party to H SEB is liable to be disallowed a nd re c overable from the party. At the first instance I discuss the ad m issibility of Cenvat/modvat credit availed by the party on F . O., R. F .O., H.P.S. and L.D.O. used i n the generation of electricity. T he de f inition of inputs given under Rule 2(f) of the CENVAT Cr e dit (N o .2) Rules, 2001 and 2002 and R ule 2(g) of CENVAT Credit Rules, 20 0 4 is as under:

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"inputs" means all goods, except high speed diesel oil a nd motor spirit, commonly kno w n as petrol, used in or in rela t ion to the manufacture of fi n al products whether directly or indirectly and whether cont a ined in the final product or not a nd includes lubricating oils, greases, cutting oils, coola n ts, accessories of the final pr o ducts cleared alongwith the fi nal products, goods used as pa i nts, or as packing material, o r as fuel, or for generation of electricity or steam used for manufacture of final produ c ts or for any other purpose, wi t hin the factory of production. Explanation 1: The high s peed diesel oil or motor sp i rit, commonly known as petrol, s hall not be treated as an input for any purpose whatsoever.

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Explanation 2: Inputs inclu d es goods used in the manufac t ure of capital goods which are further used in the factory of the manufacture."

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15. From the definition of the Inputs, it is evident t hat M o dvat/Cenvat credit is admissi b le on the inputs/goods which are us e d for generation of electricit y , used for manufacture of fi nal pr o ducts within the factory of production. Thus there are t wo co n ditions/legs for allowing M odvat/ Cenvat Credit on the in p uts/goods for the generation o f electricity i.e. (1) inputs/goods sh o uld be used for the genera t ion of electricity; and (ii) s u ch ele c tricity should be used for the m anufacture of final products wi t hin th e factory of production. I obser v e that the said party have fulfi l led th e first condition/leg because th e y have used the inputs/goods on which they have taken Modvat/C e nvat Credit for the generatio n of ele c tricity. But they have failed to fulfill the second condition / leg be c ause they have not used elect r icity so generated and exporte d to H SE B for the manufacture of th e ir final products or for any o t her pu r pose within their factory of p roduction. The department in the sh o w cause notice has not disputed the admissibility of Ce n vat/modvat credit on F.O., R. F .O., H.P.S. and L.D.O. used in the ge n eration of electricity. Theref o re, the contentions of the p a rty re g arding admissibility of Cenvat/ m odvat credit are insignificant. T he on ly dispute is in respect of the amount of Cenvat/modvat cr e dit av a iled on the inputs used in the g eneration of electricity exporte d to

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H SE B as the same has not been used in the manufacture of fi nal pr o duct within the factory of prod u ction as required under the sec o nd le g of the definition of inputs und e r Rule 2(f)/2(g) of the Rules, i b id. Th e party in their reply have stre s sed that they have been expor t ing po w er to HSEB to remove the flu c tuations and other short comin g in th e power generated by their D.G. Sets since the same cannot be u sed as it is and they are receiving b a ck equal quantity of power f r om H SE B. However, as per the condi t ions of the agreement between the H SE B and the party the conten t ions raised by the party did not ap p ear to be correct. No such clau s e appear in the agreement. On the co n trary as per clause XIV of th e agreement "the power gener a ted an d pumped into the HSEB grid f r om the captive generating unit w ill be accounted for during the billi n g month". From this clause it is cle a r that the party has been expo r ting power to HSEB and the s a me wa s being adjusted in their electri c ity bill. The fact is further clari f ied fro m the letter of AEE 'OP' S/D M . Town (DHBVNL), Hisar encl o sed as A nnexure-3 to the show cause n otice wherein the AEE has ter m ed th e power injected by the party in t heir system as power purchase d by th e Nigam. From the above it is established that the party was sel l ing a p art of the power generated in t heir power plant to HSEB and the co s t of this power was deducted f rom their monthly bill as per the ag r eement. Therefore, the part y have not used such electri c ity ge n erated by them in the manufac t ure of their final product but have sol d the same to HSEB and henc e the Cenvat/modvat credit ava i led

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on the inputs used in the generation of such electricity is inadmiss i ble un d er Rules 57A, 57B of Central E xcise Rules, 1944, 57AB, 57A A of Ce n tral Excise (2nd amendment) R ules, 2000 and Rule 2 and 3 o f the C E NVAT Credit Rules, 2001, 2002 and 2004.

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16. In their reply the party have submitted the circumstances u n der which they had not make arrang e ments for clearance of electri c ity ge n erated by them in their capt i ve power plant to HSEB as the ele c tricity produced by them was n ot usable by them. The feasib i lity re p ort of TCE has been submi t ted by them in support of t h eir co n tention. They have tried to esta b lish that they export the electri c ity ge n erated by them to HSEB and receive the same back in us a ble co n dition but this plea of the party also does not hold good since t hey ar e not exporting whole of the ele c tricity so generated but only a p art of t he same. Further as per the s t atement given by HSEB regar d ing month wise/ year wise report it is e vident that all the power gener a ted by Captive Power Plant of M/s J SL , Hisar is not exported/cleare d to th e HSEB Grid. But the arrange m ent of synchronization is such t hat on ly the excess power is being i n jected/cleared out to HSEB G rid fro m their factory.

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17. Another contention raised by t h e party is that since no facts w ere su p pressed from the Departmenta l authorities as has been allege d in th e Show Cause Notice so ext e nded period of limitation is not in v okable. The facts of captive ge n eration of electricity by the p a rty we r e in the knowledge of the dep a rtment since the audit has vis i ted

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th e m and they were availing the cr e dit of duty paid on D.G. Sets. T hey further contended that the depar t mental authorities had vide letter dt. 1 5.11.2000 specifically asked t hem to furnish information a b out ag r eement entered into with the State Electricity Board and t hey su b mitted the various details. I h ave gone through the docum e nts pr o duced by the party in support o f this contention raised by the m . I ob s erve that the audit of their record was conducted and from the av a ilment of Cenvat/modvat credit on the duty paid on the D.G. Se t s it sh o uld have been in the knowled g e of the department that the p a rty wa s engaged in the captive gener a tion of electricity but the party has no t produced any documentary ev i dence to suggest that the existence of their agreement with the H SEB was in the knowledge of de p artment. They have also not been able to produce any evidenc e to pr o ve that they had supplied the in f ormation asked for the depart m ent vi d e letter dt.15.11.2000. There f ore, I observe that the pa r ty's co n tentions are not tenable and t h ey have suppressed all these f a cts fro m the Department and did not inform any communication to the De p artment that they were clearing/injecting electricity generate d by th e m in their captive power pl a nt to the Grid of HSEB. I t is est a blished that this act of omis s ion and commission of the p a rty ta n tamount to suppression of fa c ts from the Department with the int e ntion to evade payment of duty by wrongly avai l ing M o dvat/Cenvat credit on the fuel u sed in the generation of electri c ity

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which was exported to HSEB (no w DHBVNL) and therefore, lo n ger pe r iod of five years has been corre c tly invoked in this case. * * * *

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25. As regard the quantum of g o od/fuel used in the generatio n of ele c tricity which was exported/cl e ared to the HSEB and amoun t of Rs.4,22,06,993/- involved in such g oods/fuel (ad detailed in the S h ow Ca u se Notice) in respect of s h ow cause notice dt.30.12.2 0 03, Rs.70,74,874/in respect sh o w cause notice dt.28.6.2 0 04, Rs.78,06,003/- in respect of sho w cause notice dt.28.12.2004, a nd Rs.87,20,836/- in respect of sho w cause notice dt.27.6.2005, I f ind th a t the party have not disputed t he same either in the reply to the SC N or at the time of personal hea r ing. * * * *

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29. In view of the above discus s ions and findings and have re g ard to t he facts and circumstances of t h e case I pass the following orde r : (I) I disallow Modvat/CENVAT C redit amounting Rs.4,22,06,9 9 3/(R u pees Four Crores Twenty-Two Lacs Six Thousand Nine Hun d red an d Ninety-Three only for the peri o d Jan. 99 to June 03 and order for re c overy of the same from the said party under Rule 571(1)(11 ) of Ce n tral Excise Rules, 1944, Rule 5 7AH (2) of the Central Excise ( 2 nd amendment) Rules, 2000 and Rule 12 of CENVAT Credit Rules, 2 0 01 an d 2002 read with proviso to Se c tion 11A (1) of Central Excise A ct, 19 4 4, by invoking extended perio d of five years as proposed in s h ow ca u se notice dt. 30.12.2003.

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(II ) I disallow CENVAT Credit a m ounting to Rs.70,74,874/- (Ru p ees Se v enty Lacs Seventy Four Thousa n d Eight Hundred and Seventy f our on ly ) and Rs. 78,06,003/- (Rupee s Seventy Eight Lacs Six Thous a nd an d Three only) and order for r e covery of the same from the s aid pa r ty under Rule 12 of the Cenvat Credit Rules, 2002 as propose d in th e show Cause notice dt. 28.06.2004 and 28.12.2004 respectively. (1 1 1) 1 disallow CENVAT Cr e dit amounting to Rs.87,20,8 3 6/(R u pees Eighty Seven Lacs Twe n ty Thousand Eight Hundred a nd Th i rty Six only) and order for r e covery of the same from the s aid pa r ty under Rule 12 of the Cenvat Credit Rules, 2002 and Rule 1 4 of th e Cenvat Credit Rules, 2004 as p roposed in the show cause no t ice dt. 2 7.06.2005.

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(I V) I impose a penalty of Rs.4,22,06,993/- (Rupees Four Cr o res T w enty Two Lacs Six Thousand Nine Hundred and Ninety- T h ree on ly ) upon the party under Rule 5 7 1(4) of Central Excise Rule, 1 9 44, Ru l e 57AH (2) of Central Excise (2nd amendment) Rules, 2000 a nd Ru l e 13 (2) of CENVAT Credit Rules, 2001 and 2002 read w ith Se c tion 11AC of the Central Exci s e Act, 1944 respect of show no t ice dt. 3 0.12.2003.

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(V ) 1 Am also Impose penalty Rs. 5 ,00,000/- (Rupees Five Lacs o n ly) up o n the party under Rule 1730 ( 1) (bb) Rules, 1944 of for Cen t ral Ex c ise the aforesaid violation of R u les in respect of show cause no t ice dt. 3 0.12.2003.

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(V I) I also order for recover y of interest on Rs.6,58,08,7 0 6/(R s .4,22,06,993/- Rs.7074874/- + Rs.7806003/-+ Rs.8720836/-) (at th e applicable/ appropriate rate o f interest from time to time) from the sai d party under Rule 571 (5) o f Central Excise Rules, 1944, R ule 57 A H (1) of Central Excise (2nd a m endment) rules, 2000 and Rul e 12 of the CENVAT Credit Rules, 2 0 01 and 2002 and Rule 14 of the Ce n vat Credit Rules, 2004 read w ith Section 11AB of the Cen t ral Ex c ise Act, 1944.

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(V I I) I also impose a penalty R s .1.50 Crores (Rupees One C r ore Fi f ty Lacs) upon the party under R ule 13 of the Cenvat Credit Rules, 20 0 1 and 2002 and Rule 15 of th e Cenvat Credit Rules, 2004 for the af o resaid violation of Rules in r espect of show cause notices dt. 28.06.2004 and 27.06.2005. (V I II) I impose Penalty of Rs.5,0 0 ,000/- (Rupees Five Lacs only) on Sh r i R.K. Gupta, General Manage r of the Company under Rule 2 0 9A of t he Central Excise Rules, 13(1) o f CENVAT Credit Rules, 2001 a nd 20 0 2.

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Th e respondent challenged the a b ove referred to Order-in-Orig i nal dated 30.11.20 0 5 passed by the Commissioner of Central Excise, Rohtak by fi l ing an appeal befo r e the Customs, Excise and Se r vice Tax Appellate Tribunal, N ew Delhi and the s a me was allowed by the learned T ribunal.

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He n ce the present appeal.

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Le a rned counsel for the appellant c ontends that :- a) The findings of the Tribu n al are factually incorrect and the rel e vant clauses of the agreement and evidence relied upon by adjudicating authority has not bee n dealt with or considered b) The findings of the learned Tribunal that respondent recei v ed the same quantity of electricity w hich was cleared to HSEB is a lso factually incorrect and contrary to the facts on record. The detail s of record of electricity supplied by th e respondent to HSEB and recei v ed by the respondent from HSEB wa s the relied upon documents to the im p ugned show cause notice, whi c h clearly showed that the qua n tity of e lectricity received and supplie d by the respondent are different. c) The case of the department is that the electricity generate d in ca p tive plant was not used in o r relation to manufacture of f i nal pr o ducts within the factory of pr o duction and rather sold to HS E B. As per explanation introduced i n notification number 4/94 d a ted 01.03.1994 inputs used as fuel were entitled to Modvat cr e dit, pr o vided such fuels are either u tilised directly or indirectly for ge n erating electricity, as an inter m ediary product, and is integr a lly co n nected with several operations , which result in emergence of the fin a l product, however, in the ins t ant case, fuels used in the cap t ive pl a nt for generating electricity, w hich was sold to Haryana S t ate El e ctricity Board was not at all co n nected with the operations lea d ing to e mergence of the final product.

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CEA-84-2009 (O&M) - 17-

¶86

Pe r contra, learned counsel for t he respondent contends that t h ey were exporting power to HSEB to remove flu c tuations and other shortcoming s in the power gene r ated by their DG sets since th e same cannot be used as it is a nd they were recei v ing back equal quantity of po w er from HSEB. Therefore, they are entitled to CEN V AT Credit availed on fuel use d in generation of electricity.

¶87

W e have heard learned counsel fo r the parties and perused the w h ole record of the ca s e.

¶88

Re l evant portion of the impugned order dated 21.08.2008 passe d by the learned Tri b unal is reproduced as under:-

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“5. We find that the appellants a vailed credit in respect of input s in ge n eration of electricity. The ap p ellants entered into an agree m ent wi t h the State Electricity Board t ermed as Wheeling Agreemen t by which the appellants were permitt e d to clear the electricity gener a ted in the captive power plant and simultaneously to receive e q ual qu a ntity of electricity from the e l ectricity board. The fact that the ap p ellant received same quantity o f electricity which were cleare d to th e electricity board is not in dis p ute. This agreement was mad e as th e electricity generated in the ca p tive power plant is fluctuating ty pe an d as such power cannot be used in the Arch Furnace, Strip Mill a nd Gr o oming Mill. The agreement w ith the electricity board wa s to maintain uniform frequency of el e ctricity. In these situation as the in p uts used in generation of electr i city which was cleared to the S t ate El e ctricity Board and the same q u antity was received back from the ele c tricity board and used in th e manufacture of excisable goods

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CEA-84-2009 (O&M) - 18-

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cle a red on payment of duty we fi n d that the demand on the gro u nd th a t the inputs were used in ge n eration of electricity which w as cle a red outside the factory o f production is not sustaina b le. Th e refore, appeals are allowed.”

¶93

A p erusal of the above shows tha t the dispute in the present cas e is that the electri c ity generated in captive pla n t was not used in or relatio n to manufacture o f final products within the fact o ry of production but was sol d to HSEB whereas learned Tribunal did not decid e this dispute and held that there is no dispute with regard to the appellant receivin g same quantity of electricity w h ich was cleared to the Electricity Board, therefo r e, the issue in dispute was n e ver decided by the learned Tribunal.

¶94

D u ring the course of arguments bo t h the counsel for the parties agreed that the matter be remanded back to the lea r ned Tribunal to decide the ab o ve referred to issu e in dispute.

¶95

In view of the above, the matte r is remanded back to the lear n ed Tribunal to dec i de the dispute as referred to abo v e in para 11 of this judgment. 14. Di s posed of accordingly.

¶96

Pe n ding applications, if any, also s t and disposed of.

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(ARUN PALLI) (SUDEEPTI SHARMA) JUDGE JUDGE

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January 28, 2025 tripti

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W h ether speaking/non-speaking : S peaking W h ether reportable : Y es

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Commissioner of Central Excise Rohtak v. M/S Jindal Stainless Ltd.

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Commissioner of Central Excise Rohtak v. M/S Jindal Stainless Ltd.

Case brief

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