M/S Steel Authority Of India Ltd vs Cce, Raipur

[Arising out of the Order-in-Appeal No. 53/RPR-II/2006 dated 17/05/2006 passed by The Commissioner (Appeals) of Central Excise, Raipur.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Steel Authority of India Ltd. Appellant

Versus

CCE, Raipur Respondent

Appearance

Shri B.L. Narsimhan, Advocate  for the appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52648/2015 Dated : 20/08/2015

Per. B. Ravichandran :-

The appellants are engaged in the manufacture of various Irion Steel items liable to Central Excise duty. They are also availing Cenvat credit on various inputs and capital goods. The appellants have the captive power plant and used the power produced therein in their manufacturing activity. One such captive power plant was transferred to another company, namely M/s Bhilai Electric Supply Company Limited, which is a 50-50% Joint Venture of the appellant and M/s NTPC. The dispute arose regarding eligibility of Cenvat credit on certain inputs purchased (Water Treatment Chemicals & LSHS) and certain items manufactured (Sulphuric Acid) by the appellant when they transferred the same to the captive power plant owned by the Joint Venture for use in the generation of electricity. After examination, a demand was raised for the period March 2002 to March 2003. The Original Authority confirmed the demand with penalty. On appeal, the Appellate Authority confirmed the original order with some reduction in penalty. Aggrieved by this order, the appellant is before us. The main plea of the appellant is that some vital points raised by them were never discussed by the lower Authorities. In April 2002 itself they have provided the full details of business transaction relating to transfer of the assets of captive power plant to a new entity. Though there is change of ownership of this power plant there is no movement of inputs, capital goods, plant and machinery from anywhere. The power plant continue to remain within the factory premises of the appellant. Their main contention is that the inputs purchased/manufactured by the appellants and transferred to the power plant situated within their factory premises are not liable to duty/reversal of credit.

2. During the course of argument, the learned Counsel for the appellant stated that there is no removal of goods outside the factory and the captive power plant continues to remain as integral part of the factory of production of the appellant. Whatever inputs manufactured/purchased by the appellant and supplied to the power plant are fully utilized in the generation of electricity which in turn is fully utilized by the appellants. The transfer of ownership of the power plant to a JV unit will not in any manner affect their eligibility for non-payment of duty or credit to the purchased inputs. Even otherwise the provision of Rule 4 (5) (a) of Cenvat Credit Rules are available to them for clearance of these inputs to the power plant owned by Joint Venture for generation of electricity. This position is confirmed by the Tribunal in Haldia Petrochemicals Ltd. vs. CCE, Haldia reported in 2006 (197) E.L.T. 97 (Tri.  Del.). The learned Counsel for the appellant pleaded that Notification No. 67/1995-CE dated 16/03/1995 is also rightly available to them in respect of capital goods and inputs. The learned AR on the other hand reiterated the findings of the lower Authorities and stated that when the ownership of the power plant is transferred to another legal entity the same should be considered as another factory and the procedure as applicable for clearance from one factory to another factory has to be followed.

3. Heard both the sides and examined appeal records carefully. The short point for decision is whether or not the appellants are eligible for concessions available for the goods manufactured/purchased by them when transferred to the power plant owned by another entity inside their factory premises. The Revenue held the view that this will amount to removal outside the factory and as such the liability arose. We find that the factory premises as licenced under Central Excise provisions in respect of the appellants continued to be unaffected and no separate Central Excise licence with de-marketed premises was given to the power plant separately. In such situation, the Revenue cannot take a stand that the power plant is another factory and not to be considered as within the factory of the appellant. The appellants case is further strengthened in view of the fact that all the inputs transferred to the power plants by the appellant are fully utilized in or in relation to the manufacture of electricity which in turn is fully used captively by the appellants. As such, we find the impugned order of the lower Authorities is not sustainable and accordingly we set aside the same and allow the appeal with consequential relief, if any.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

PK

??

??

??

??

5