By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
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CENVAT credit eligibility for input services and capital goods for generation of electricity which is partly consumed captively and partly sold to MSEB.
Facts
The Appellant is a manufacturer of excisable goods and had installed power plant for generating electricity. Some proportion of electricity generated was consumed captively and balance was sold. CENVAT credit on capital goods was rejected on the ground that they were used for the sale of electricity. Further, in view of non-maintenance of separate records for captive consumption and sale of electricity, demand was raised for payment on value of electricity sold vide Rule 6 (3) of CENVAT Credit Rules, 2004. It was argued that when exclusively used for exempted production CENVAT credit on capital goods is not available. Further, CENVAT credit on input services was taken at the end of the month having regard to the actual captive consumption and therefore, proper records were maintained and therefore, CENVAT credit was not deniable and no payment was required to be made as per Rule 6 (3).
Held
Relying on the decision of H.E.G. Ltd. 2012 (275) ELT 316 (Chhattisgarh), it was held that since capital goods were not exclusively used in electricity sold, CENVAT credit cannot be denied. Further CENVAT credit was not availed on input services used in generation of electricity sold and therefore, relying on the decision of Hon’ble Supreme Court in case of Maruti Suzuki Ltd. 2009 (240) ELT 641 (SC), payment was not required to be made under Rule 6 (3).
