Case Law Details
Haldia Petrochemicals Limited Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
CESTAT Kolkata held that naphtha used for generation of electricity which is consumed within the factory of production is eligible for Cenvat Credit.
Facts- M/s. Haldia Petrochemicals Limited (the Appellant) are engaged in the manufacture of petrochemical products. A Show Cause Notice dated 08.04.2011 was issued to the Appellant proposing reversal of Cenvat credit of Rs.9,35,24,895.78, on account of naphtha used for generation of electricity which was used for production purposes in the power plant, by invoking the extended period of limitation. The said Notice was adjudicated by the Commissioner, Haldia vide Order-in-Original dated 17.10.2012, wherein the reversal of Cenvat credit as proposed in the Notice was confirmed along with interest under Rule 14 and Section 11AB. Equivalent penalty was also imposed under Rule 15 read with Section 11AC of the Central Excise Act, 1944. Aggrieved against the impugned order, the Appellant filed the present appeal.
Conclusion- Naphtha used in the power plant to produce electricity which was used in the power plant itself for the production of electricity is an ‘inpu’ within the meaning of rule 2(k) of the 2004 Rules. As held by the Hon’ble Supreme Court, “electricity generation also forms part of the manufacturing activity and the “input” used in that electricity generation is an “input used in the manufacture” of final product”.
Accordingly, we hold that the Appellant is eligible for the Cenvat credit availed on naphtha, which is used for generation of electricity and consumed within the factory of production.
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