Hindustan Zinc Limited Vs Commissioner of Central Excise & CGST (CESTAT Delhi)
CESTAT Delhi allowed the appeals filed by a manufacturer of zinc ingots and lead products against demands raised under Rule 6 of the CENVAT Credit Rules relating to electricity generated in its captive power plant and partly transferred to its sister concern and a power distribution company. The Department alleged that the appellant had availed CENVAT credit on inputs, capital goods, and input services used in the generation of electricity and had failed to maintain separate records for exempted and dutiable products. Consequently, show cause notices were issued for the period 2011-12 to 2017-18 demanding amounts calculated at 5%/6% of the value of electricity transferred or sold, along with interest and penalties.
The appellant contended that it had already reversed proportionate CENVAT credit attributable to the electricity sold or transferred outside the unit. A total reversal of ₹2.06 crore had been made during the relevant period, and the reversals had been periodically intimated to the Department. The appellant argued that proportionate reversal of credit amounts to non-availment of credit and constitutes compliance with Rule 6(3A) of the CENVAT Credit Rules. It also relied on earlier Tribunal decisions in its own cases and several judicial precedents supporting this position.
