Madhucon Sugar & Power Industries Ltd. Vs Pr. Commissioner of Central Tax Rangareddy – GST (CESTAT Hyderabad)
Material Facts
The appellant challenged the Order-in-Original dated 28.09.2012, whereby the Commissioner confirmed recovery of CENVAT credit of Rs.1,17,49,121 along with interest and imposed an equal penalty under Rule 15(2) of the CENVAT Credit Rules, 2004 read with Section 11AC.
The Department alleged that the appellant had availed CENVAT credit of service tax on various taxable input services received for exclusive use in its captive power plant. The services included commissioning and erection, engineering services, professional consultancy, repairing and re-shelling, freight, cable laying, supervision, servicing, testing, vulcanizing, fabrication and inspection.
The Department took the view that electricity generated by the captive power plant was an excisable good covered under Tariff Heading 2716 0000 but was not subject to central excise duty and therefore constituted exempted goods. On this basis, it sought recovery of CENVAT credit under Rule 6(3) of the CENVAT Credit Rules, 2004.
The appellant contended that electricity generated in the co-generation plant was partly used captively in the manufacture of dutiable sugar and molasses and only the surplus was supplied to the grid. It also submitted that the impugned services were used for sugar division expansion, fabrication and erection of the co-generation plant, and erection and commissioning of boilers forming part of the sugar manufacturing plant.
