Shahabad Co Op Sugar Mills Ltd Vs Commissioner of CE & ST (CESTAT Chandigarh)
In Shahabad Co-Op Sugar Mills Ltd. Vs Commissioner of CE & ST, the CESTAT Chandigarh examined whether Cenvat credit was admissible on capital goods and inputs used for setting up a power plant within the factory premises.
The Department alleged that the appellant had wrongly availed Cenvat credit amounting to Rs. 4.97 crore during January 2009 to March 2010 on inputs and capital goods used in establishing a power plant. The plant was intended to increase electricity generation capacity from 8 MW to 24 MW. Out of the total power generated, 8 MW was meant for captive consumption in the sugar manufacturing process, while 16 MW was to be supplied to the Haryana Electricity Department. The Department argued that the power plant constituted non-excisable and exempted goods and, therefore, credit was barred under Rules 6(1) and 6(4) of the Cenvat Credit Rules, 2004.
The show cause notice relied upon the Supreme Court judgment in Triveni Engineering & Industries Ltd. and CBEC Circular No. 58/1/2002-CX dated 15.02.2002, contending that turnkey projects such as power plants erected at site are non-excisable. On this basis, the Department demanded reversal of credit along with interest and penalty by invoking the extended limitation period.
