Hindalco Industries Ltd. Vs Commissioner of Central Excise (CESTAT Delhi)
Summary: The appellant, M/s Hindalco Industries Ltd., Renukoot, was engaged in the manufacture of aluminium and products thereof liable to excise duty. The appellant had a power plant, namely Renusagar Power Plant, located at a distance from its main manufacturing unit. The entire power generated by Renusagar Power Plant was supplied to Hindalco Industries Ltd.
During August 2009 to February 2010, the appellant availed Cenvat credit of service tax amounting to Rs. 35 lakhs on insurance premiums paid to M/s New India Assurance Company Ltd. under various insurance policies covering the power plant, including mega risk and terrorism insurance policies. The credit was utilised for payment of duty on clearances of final products.
The Department took the view that Renusagar Power Plant, being situated at a different premises, was a separate entity and could not be regarded as a captive power plant. On this basis, the Department alleged that the appellant had wrongly availed Cenvat credit in respect of services relating to insurance policies covering the power plant. A show cause notice was accordingly issued proposing disallowance and recovery of the credit with interest and imposition of penalty.
The appellant contended that Renusagar Power Plant formed part of Hindalco Industries Ltd. and was a captive power plant whose electricity was used for production of the appellant’s final products. The adjudicating authority rejected the contention, disallowed the Cenvat credit of Rs. 35 lakhs, confirmed the demand with interest and imposed a penalty of Rs. 2,000. The Commissioner (Appeals) dismissed the appellant’s appeal on 20 September 2011.
