Jindal Stainless Ltd. Vs Commissioner of Central Excise (CESTAT Chandigarh)
CESTAT Chandigarh held that CENVAT Credit on inputs used in generation of electricity is admissible only to the extent the electricity produced and utilized in the factory of production and not on the portion of electricity transferred/sold to the grid.
Facts- The appellants, M/s Jindal Stainless Ltd, are manufacturers of slabs, blooms, ingots etc; in order to overcome the shortages of power and power outages, the appellants established a captive power plant with DG Sets to generate electricity; as the power generated was unstable and unsuitable for direct use in the furnaces and mills, the appellants entered into several agreements (during the period 1987 -1996) with Haryana State Electricity Board (HSEB) to synchronize power with grid and receiving back an equivalent power from the grid; as the electricity generated by the DG Sets was used in the factory for manufacture of excisable goods, the appellants have taken CENVAT credit of duty paid on furnace oil etc. used in the generation of electricity. HSEB were charging 10% as wheeling charges from the appellants.
Revenue contested that CENVAT Credit of duty paid on inputs such as furnace oil etc. used in manufacture of electricity is not admissible. Accordingly, Commissioner confirmed the demand of CENVAT Credit of Rs. 6,58,08,706/-, for the period January 1999 to December 2004, along with interest and penalty.
