28.01.2025 Commissioner of Central Excise, Commissioner of Central Excise, Commissionerate Rohtak Commissionerate Rohtak v. M/s Jindal Stainless Ltd. M/s Jindal Stainless Ltd
Case Details
CEA-84-2009 (O&M) (O&M) -1- 201 IN THE HIGH COURT OF PUNJAB AND HARYANA IN THE HIGH COURT OF PUNJAB AND HARYANA IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH AT CHANDIGARH -.- CEA-84- Reserved on :- 07.01.2025 Reserved on : Date of Pronouncement -2009 (O&M) Pronouncement:28.01.2025 Commissioner of Central Excise, Commissioner of Central Excise, Commissionerate Rohtak Commissionerate Rohtak ....Appellant VERSUS M/s Jindal Stainless Ltd. M/s Jindal Stainless Ltd. ....Respondent CORAM : HON'BLE MR. JUSTICE ARUN PALLI HON'BLE MR. JUSTICE ARUN PALLI SUDEEPTI SHARMA HON’BLE MRS. JUSTICE SUDEEPTI SHARMA HON’BLE Present: Mr. Sunish Bindlish, Advocate and Mr. Sunish Bindlish, Advocate and Mr. Viney Kumar, Advocate for the appellant Mr. Viney Kumar, Advocate for the appellant. Mr. Ankit Awal, Advocate for the respondent. Mr. Ankit Awal, Advocate for the respondent. Mr. Ankit Awal, Advocate for the respondent. -.- SUDEEPTI SHARMA, J. SUDEEPTI SHARMA, J. 1. The present appeal is preferred by the Commissioner of Central The present appeal is preferred by the Commissioner of Central The present appeal is preferred by the Commissioner of Central The present appeal is preferred by the Commissioner of Central Excise, Commissionerate, Rohtak, under Section 35(G) of the Central Excise Act, Excise, Commissionerate, Rohtak, under Section 35(G) of the Central Excise Act, Excise, Commissionerate, Rohtak, under Section 35(G) of the Central Excise Act, Excise, Commissionerate, Rohtak, under Section 35(G) of the Central Excise Act, 1944, against the order dated 21.08.2008 passed by the learned Customs, Excise & 1944, against the order dated 21.08.2008 passed by the learned Customs, Excise & 1944, against the order dated 21.08.2008 passed by the learned Customs, Excise & 1944, against the order dated 21.08.2008 passed by the learned Customs, Excise & Service Tax Appellate Tribunal, New Delhi. Service Tax Appellate Tribunal, New Delhi. 2. Original and the The brief facts of the case as per the Order-in-Original and the The brief facts of the case as per the Order The brief facts of the case as per the Order relevant portion of the findings are reproduced as under:- relevant portion of the findings are reproduced as under: relevant portion of the findings are reproduced as under: “ M/s Jindal Strips Ltd., Delhi Road, Hisar (hereinafter referred /s Jindal Strips Ltd., Delhi Road, Hisar (hereinafter referred to as the Party) are engaged in the manufacture of goods such as Party) are engaged in the manufacture of goods such as Slabs, Blooms, Ingots, HR Strips/Coils Slabs, Blooms, Ingots, HR falling Strips/Coils of Stainless Steel etc. falling and are under Chapter 72 of the Central Excise Tariff Act, 1985 and are under Chapter 72 of the Central under Chapter 72 of the Central with registered with registered Number the Central Excise vide Registration Number the Central Excise vide Registration TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -2- AABCJ1969MXM001. The party are AABCJ1969MXM001. availing the Modvat/CENVAT The party are availing the Modvat/CENVAT Credit facility of duty paid on input/raw materials and Credit facility Capital Goods. of duty paid on input/raw materials and Capital Goods. The party have installed a captive power plant The party have installed a captive power plant for generation on of electricity using fuel namely, R.O., electricity using fuel namely, R.F.O, H.P.S. and L.D.O. on R.O., R.F.O, H.P.S. and L.D.O. on which they are taking Modvat/CENVAT credit under Rule 57A which they are and taking Modvat/CENVAT credit under Rule 57A and and 3 of CENVAT 57B of the Central Excise Rules, 1944, Rule 2 and 3 of CENVAT 57B of the Central Excise Rules, 1944, 57B of the Central Excise Rules, 1944, Credit (No.2) Rules, 2001 and Rule 2 and 3 of CENVAT Credit (No.2) Rule, Rules, 2001 and Rule 2 and 3 of CENVAT Credit Rule, 2002. 2002. 2. Acting on an intelligence that the said party ware clearing Acting on an intelligence that the said party ware clearing Acting on an intelligence that the said party ware clearing some part of electricity generated by their Captive Power Plan to some part of electricity generated by their Captive Power Plan to some part of electricity generated by their Captive Power Plan to some part of electricity generated by their Captive Power Plan to Electricity Board the Haryana State (HSEB) ((now Dakshin Haryana Electricity Board the Haryana State (HSEB) ((now Dakshin Haryana Electricity Board the Haryana State (HSEB) ((now Dakshin Haryana Electricity Board the Haryana State (HSEB) ((now Dakshin Haryana conducted by the Bijli Vitran Nigam Ltd. (DHBVNL)) an enquiry was conducted by the Bijli Vitran Nigam Ltd. (DHBVNL)) an enquiry was Bijli Vitran Nigam Ltd. (DHBVNL)) an enquiry was officers of Central Excise. The party produced the permission letter officers of Central Excise. The party produced the permission letter officers of Central Excise. The party produced the permission letter officers of Central Excise. The party produced the permission letter Memo No.210/DB- 33 (3)85/Jindal Strips/Hisar dt Memo No.210/DB 90 the 33 (3)85/Jindal Strips/Hisar dt 1-10-90 the Secretary, Technical Section, HSEB, Panchkula (Haryana) for Secretary, Technical Section, HSEB, Panchkula (Haryana) for Secretary, Technical Section, HSEB, Panchkula (Haryana) for Secretary, Technical Section, HSEB, Panchkula (Haryana) for h HSEB, Power parallel operation of their Captive Power Plan with HSEB, Power parallel operation of their Captive Power Plan wit parallel operation of their Captive Power Plan wit Grid. On scrutiny of the Permission Letter it was observed by the Grid. On scrutiny of the Permission Letter it was observed by Grid. On scrutiny of the Permission Letter it was observed by Grid. On scrutiny of the Permission Letter it was observed by Central Excise officers that as per Clause0II of the Permission Letter, Central Excise officers that as per Clause0II of the Permission Letter, Central Excise officers that as per Clause0II of the Permission Letter, Central Excise officers that as per Clause0II of the Permission Letter, the Captive Power Plant was synchronized with the HSEB Power the Captive Power Plant was synchronized with the HSEB Power the Captive Power Plant was synchronized with the HSEB Power the Captive Power Plant was synchronized with the HSEB Power Grid on 11KV. Further as per the agreement Grid on 11KV. the party provided the agreement the party provided Export/Import Meters on 11KV bus for recording power injected by Export/Import Meters on 11KV bus for recording power injected by Export/Import Meters on 11KV bus for recording power injected by Export/Import Meters on 11KV bus for recording power injected by their Captive Power Plant to the HSEB system and power drawls their Captive Power Plant to the HSEB system and power drawls their Captive Power Plant to the HSEB system and power drawls their Captive Power Plant to the HSEB system and power drawls from HSEB system respectively. The party had been clearing some from HSEB system respectively. The party had been clearing some from HSEB system respectively. The party had been clearing some from HSEB system respectively. The party had been clearing some Plant to HSEB part of the power generated by their Captive Power Plant to HSEB part of the power generated by their Captive P part of the power generated by their Captive P TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -3- and not reversing the proportionate Modvat/CENVAT credit taken on and not reversing the proportionate Modvat/CENVAT credit taken on and not reversing the proportionate Modvat/CENVAT credit taken on and not reversing the proportionate Modvat/CENVAT credit taken on the fuel which was consumed by them for the generation of electricity the fuel which was consumed by them for the generation of electricity the fuel which was consumed by them for the generation of electricity the fuel which was consumed by them for the generation of electricity exported to HSEB. exported to HSEB. 3. The SDO (DHBVNL), HSEB (the AEE"OP" S/D, Model Town The SDO (DHBVNL), HSEB (the AEE"OP" S/D, Model Town The SDO (DHBVNL), HSEB (the AEE"OP" S/D, Model Town e statement of power purchased/sold in (DHBVNL) Hisar submitted the statement of power purchased/sold in e statement of power purchased/sold in (DHBVNL) Hisar submitted th 92 to respect of M/s Jindal Strips Ltd., Hisar for the period 1991-92 to respect of M/s Jindal Strips Ltd., Hisar for the period 1991 respect of M/s Jindal Strips Ltd., Hisar for the period 1991 04 (upto June, 2003). The AEE "OP" S/D, Model Town, Hisar 2003-04 (upto June, 2003). The AEE "OP" S/D, Model Town, Hisar 04 (upto June, 2003). The AEE "OP" S/D, Model Town, Hisar 2003 further clarified vide letter dt. 30-07 further clarified vide letter dt. 30 03 that the power purchased by 07-03 that the power purchased by am, i.e. the power ejected by M/s Jindal Strips Ltd., the HSEB now Nigam, i.e. the power ejected by M/s Jindal Strips Ltd., am, i.e. the power ejected by M/s Jindal Strips Ltd., the HSEB now Nig Hisar in their system, was measured by the export meter and the Hisar in their system, was measured by the export meter and the Hisar in their system, was measured by the export meter and the Hisar in their system, was measured by the export meter and the Nigam had not been making any cash payment for the units purchased Nigam had not been making any cash payment for the units purchased Nigam had not been making any cash payment for the units purchased Nigam had not been making any cash payment for the units purchased by Nigam from M/s Jindal Strips Ltd., Hisar. However, the units by Nigam from M/s Jindal Strips Ltd., Hisar. However, the units by Nigam from M/s Jindal Strips Ltd., Hisar. However, the units by Nigam from M/s Jindal Strips Ltd., Hisar. However, the units /injected by M/s Jindal Strips Ltd., Hisar in their system were cleared/injected by M/s Jindal Strips Ltd., Hisar in their system were /injected by M/s Jindal Strips Ltd., Hisar in their system were cleared adjusted in the monthly electricity bills at the same rate at which adjusted in the monthly electricity bills at the same rate at which adjusted in the monthly electricity bills at the same rate at which adjusted in the monthly electricity bills at the same rate at which Nigam sold to M/s Jindal Strips Ltd., Hisar after deducting 10% of the Nigam sold to M/s Jindal Strips Ltd., Hisar after deducting 10% of the Nigam sold to M/s Jindal Strips Ltd., Hisar after deducting 10% of the Nigam sold to M/s Jindal Strips Ltd., Hisar after deducting 10% of the total cleared units/injected by M/s Jindal Strips Ltd total cleared Hisar in their ected by M/s Jindal Strips Ltd. Hisar in their system. system. 4.
Legal Reasoning
e President of the Party in his voluntary Shri Arun Goel, Vice President of the Party in his voluntary e President of the Party in his voluntary 2003 under Section 14 of the Central Excise statement dated 24- 07-2003 under Section 14 of the Central Excise 2003 under Section 14 of the Central Excise statement dated 24 Act, 1944 stated that he was working as Incharge of Act, 1944 stated that he was Electricity working as Incharge of Electricity Maintenance and admitted that the power cleared/injected by their Maintenance and admitted that the power cleared/injected by their Maintenance and admitted that the power cleared/injected by their Maintenance and admitted that the power cleared/injected by their Captive Power Plant to HSEB system was measured by Export Meter. Captive Power Plant to HSEB system was measured by Export Meter. Captive Power Plant to HSEB system was measured by Export Meter. Captive Power Plant to HSEB system was measured by Export Meter. 03 he submitted the data sheet for fuel consumption in On 21-8-03 he submitted the data sheet for fuel consumption in 03 he submitted the data sheet for fuel consumption in On 21 01 to March, 2003 Captive Power Plant for the period from April, 2001 to March, 2003 Captive Power Plant for the period from April, 20 Captive Power Plant for the period from April, 20 TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -4- and he further stated that the fuel consumption report in respect of and he further stated that the fuel consumption report in respect of and he further stated that the fuel consumption report in respect of and he further stated that the fuel consumption report in respect of Captive Power Plant before April, 2001 was not available with him. Captive Power Plant before April, 2001 was not available with him. Captive Power Plant before April, 2001 was not available with him. Captive Power Plant before April, 2001 was not available with him. 5. Shri R.K. Gupta, General Manager (Excise) of the Party in his Shri R.K. Gupta, General Manager (Excise) of the Party in his Shri R.K. Gupta, General Manager (Excise) of the Party in his voluntary statement dated 24-07-2003 voluntary statement dated 24 under Section 14 of the Central 2003 under Section 14 of the Central Excise Act, stated that they were using F.O., R.F.O. and L.D.O. for Excise Act, stated that they were using F.O., R.F.O. and L.D.O. for Excise Act, stated that they were using F.O., R.F.O. and L.D.O. for Excise Act, stated that they were using F.O., R.F.O. and L.D.O. for generation of power and after 1-3 generation of power and after 1 03 the L.D.0. was not used and 3-03 the L.D.0. was not used and on fuel for also stated that they were taking Modvat/CENVAT Credit on fuel for also stated that they were taking Modvat/CENVAT Credit also stated that they were taking Modvat/CENVAT Credit d in their Captive Power Plant for generation generation of power used in their Captive Power Plant for generation d in their Captive Power Plant for generation generation of power use 2003 he stated that the power cleared/injected in of power. On 28-07-2003 he stated that the power cleared/injected in 2003 he stated that the power cleared/injected in of power. On 28 HSEB system was adjusted in the Monthly Electricity Bill. On 21-8 HSEB system was adjusted in the Monthly Electricity Bill. On 21 HSEB system was adjusted in the Monthly Electricity Bill. On 21 8-03 he stated that they were taking CENVAT credit on fuel used for he stated that they were taking CENVAT credit on fuel used for he stated that they were taking CENVAT credit on fuel used for he stated that they were taking CENVAT credit on fuel used for n of power and for other purpose in the factory. He further generation of power and for other purpose in the factory. He further n of power and for other purpose in the factory. He further generatio stated that the price of the fuel used in the generation of the electricity stated that the price of the fuel used in the generation of the electricity stated that the price of the fuel used in the generation of the electricity stated that the price of the fuel used in the generation of the electricity might be taken on average basis as they were making oil consumption might be taken on average basis as they were making oil consumption might be taken on average basis as they were making oil consumption might be taken on average basis as they were making oil consumption report as total oil used and not item wise. report as total oil used and not item wise. report as total oil used and not item wise. 6. 03 the Party submitted the total fuel Vide their letter dt. 9-10-03 the Party submitted the total fuel 03 the Party submitted the total fuel received in their factory and Modvat/CENVAT credit taken on the received in their factory and Modvat/CENVAT credit taken on the received in their factory and Modvat/CENVAT credit taken on the received in their factory and Modvat/CENVAT credit taken on the same for the period Jan., 99 to June, 03. In his further voluntary same for the period Jan., 99 to June, 03. In his further voluntary same for the period Jan., 99 to June, 03. In his further voluntary same for the period Jan., 99 to June, 03. In his further voluntary 2003 Shri R.K. Gupta admitted that written statement dated 21-10-2003 Shri R.K. Gupta admitted that 2003 Shri R.K. Gupta admitted that written statement dated 21 the entire fuel used in they were taking Modvat/CENVAT credit on the entire fuel used in they were taking Modvat/CENVAT credit they were taking Modvat/CENVAT credit their Captive Power Plant for generation of electricity. It is their Captive Power Plant for generation of electricity. It is their Captive Power Plant for generation of electricity. It is their Captive Power Plant for generation of electricity. It is characteristic of the Electricity that Electricity cannot be stored and characteristic of the Electricity that Electricity cannot be stored and characteristic of the Electricity that Electricity cannot be stored and characteristic of the Electricity that Electricity cannot be stored and also the Electricity once cleared cannot be brought bac also the Electricity once cleared cannot be brought back. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -5- 7. As per the provisions of Rule 57B of the Central Excise Rule, As per the provisions of Rule 57B of the Central Excise Rule, As per the provisions of Rule 57B of the Central Excise Rule, 1944, 57AA of the Central Excise (2nd amendment) Rules, 2000 and 1944, 57AA of the Central Excise (2nd amendment) Rules, 2000 and 1944, 57AA of the Central Excise (2nd amendment) Rules, 2000 and 1944, 57AA of the Central Excise (2nd amendment) Rules, 2000 and Rule 2(f) of CENVAT Credit (No.2) Rules, 2001 and Rule 2(g) of the Rule 2(f) of CENVAT Credit (No.2) Rules, 2001 and Rule 2(g) of the Rule 2(f) of CENVAT Credit (No.2) Rules, 2001 and Rule 2(g) of the Rule 2(f) of CENVAT Credit (No.2) Rules, 2001 and Rule 2(g) of the roduct shall Cenvat Credit Rule, 2002, a manufacturer of the final product shall Cenvat Credit Rule, 2002, a manufacturer of the final p Cenvat Credit Rule, 2002, a manufacturer of the final p be allowed to take the credit of the specified duty paid on inputs used be allowed to take the credit of the specified duty paid on inputs used be allowed to take the credit of the specified duty paid on inputs used be allowed to take the credit of the specified duty paid on inputs used for generation of electricity or steam used for manufacture of final for generation of electricity or steam used for manufacture of final for generation of electricity or steam used for manufacture of final for generation of electricity or steam used for manufacture of final product or any purpose, within the factory of production. However, product or any purpose, within the factory of production. However, product or any purpose, within the factory of production. However, product or any purpose, within the factory of production. However, arty it was revealed that they have on scrutiny of the records of the Party it was revealed that they have on scrutiny of the records of the P on scrutiny of the records of the P been clearing/injecting some portion of the electricity generated by been clearing/injecting some portion of the electricity generated by been clearing/injecting some portion of the electricity generated by been clearing/injecting some portion of the electricity generated by their Captive Power Plant to HSEB and thereby contravened the their Captive Power Plant to HSEB and thereby contravened the their Captive Power Plant to HSEB and thereby contravened the their Captive Power Plant to HSEB and thereby contravened the provisions of the aforesaid Rules by not using electricity generated by provisions of the aforesaid Rules by not using electricity generated by provisions of the aforesaid Rules by not using electricity generated by provisions of the aforesaid Rules by not using electricity generated by the specified purpose on which the party had taken using inputs for the specified purpose on which the party had taken the specified purpose on which the party had taken using inputs for Modvat/Cenvat credit. As such fuel used for generation of electricity Modvat/Cenvat credit. As such fuel used for generation of electricity Modvat/Cenvat credit. As such fuel used for generation of electricity Modvat/Cenvat credit. As such fuel used for generation of electricity and the electricity diverted/cleared outside the factory is not covered and the electricity diverted/cleared outside the factory is not covered and the electricity diverted/cleared outside the factory is not covered and the electricity diverted/cleared outside the factory is not covered of eligible inputs defined under Rule 57A of under the purview of eligible inputs defined under Rule 57A of of eligible inputs defined under Rule 57A of under the purview Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd Central Excise Rules, 1944, Rule 57AB of Central Excise (2nd amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 2 of CENVAT Credit Rules, 2001 and 2002 applicable during the relevant period and as such credit and 2002 applicable during the relevant period and as such credit and 2002 applicable during the relevant period and as such credit and 2002 applicable during the relevant period and as such credit cified taken and utilized on fuel used for the purpose other then the specified taken and utilized on fuel used for the purpose other then the spe taken and utilized on fuel used for the purpose other then the spe is recoverable. is recoverable. 8. It was observed that: (i) the party had contravened the provision of Rule 57A, 57B of (i) the party had contravened the provision of Rule 57A, 57B of (i) the party had contravened the provision of Rule 57A, 57B of Central Excise Rules 1944, 57AB, 57AA of Central Excise (2nd Central Excise Rules 1944, 57AB, 57AA of Central Excise (2nd Central Excise Rules 1944, 57AB, 57AA of Central Excise (2nd amendment) Rules, 2000 and Rule 2 and 3 of the CENVAT amendment) Rules, 2000 and Rule 2 and 3 of the CENVAT amendment) Rules, 2000 and Rule 2 and 3 of the CENVAT TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -6- and thereby availed inadmissible Credit Rules, 2001 and 2002 and thereby availed inadmissible Credit Rules, 2001 and 2002 for the Modvat/CENVAT credit to the tune of Rs. 4,22,06,993/- for the Modvat/CENVAT credit to the tune of Rs. 4,22,06,993/ period Jan., 1999 to June, 2003 on fuels used for generation of period Jan., 1999 to June, 2003 on fuels used for generation of period Jan., 1999 to June, 2003 on fuels used for generation of electricity cleared to HSEB (now DHBVNL) and the same was electricity cleared to HSEB (now DHBVNL) and the same was electricity cleared to HSEB (now DHBVNL) and the same was recoverable from them. (ii) The Party had suppressed these facts from Department that ad suppressed these facts from Department that ad suppressed these facts from Department that were clearing/injecting the part of electricity generated by they were clearing/injecting the part of electricity generated by were clearing/injecting the part of electricity generated by the Captive Power Plan the Captive Power Plan the Captive Power Plan (by using (by using (by using fuel on which fuel on which fuel on which Modvat/CENVAT credit had been taken and utilized) to HSEB. Modvat/CENVAT credit had been taken and utilized) to HSEB. Modvat/CENVAT credit had been taken and utilized) to HSEB. to HSEB came to light only This fact of clearance of electricity to HSEB came to light only This fact of clearance of electricity after the records were scrutinized by the Central Excise Officer after the records were scrutinized by the Central Excise Officer after the records were scrutinized by the Central Excise Officer which was detected after going through the discrete inquiry and which was detected after going through the discrete inquiry and which was detected after going through the discrete inquiry and verification of documents which were not submitted by the verification of documents which were not submitted by the verification of documents which were not submitted by the act of omission and Party to the Deptt. It appeared that this act of omission and Party to the Deptt. It appeared that this commission of the Party tantmounted suppression of facts tantmounted to suppression of facts from the Department and the provisions of Rule 571(1) (ii) of from the Department and the provisions of Rule 571(1) (ii) of from the Department and the provisions of Rule 571(1) (ii) of Central Excise Rules, 1944, Rule 57AH (2) of Central Excise Central Excise Rules, 1944, Rule 57AH (2) of Central Excise Central Excise Rules, 1944, Rule 57AH (2) of Central Excise (2nd amendment) Rules, 2000 and proviso to Section 11A (1) of (2nd amendment) Rules, 2000 and proviso to Section 11A (1) of (2nd amendment) Rules, 2000 and proviso to Section 11A (1) of eriod of five Central Excise Act, 1944, were attracted wherein period of five Central Excise Act, 1944, were attracted wherein p able against the party. years is invoke-able against the party. (iii) Shri R.K. Gupta, General Manager (Excise) Incharge (iii) Shri R.K. Gupta, General (Excise) Incharge of Central Excise matter of the Company dealing with day to day Central Excise matter of the Company dealing with day to day Central Excise matter of the Company dealing with day to day affairs of the Party was expected to inform this fact of using affairs of the Party was expected to inform this fact of using affairs of the Party was expected to inform this fact of using tion of the electricity being exported to HSEB fuel in the generation of the electricity being exported to HSEB tion of the electricity being exported to HSEB TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -7- (now DHBVNL) and to reverse the Modvat/ CENVAT Credit (now DHBVNL) and to reverse the Modvat/ CENVAT Credit (now DHBVNL) and to reverse the Modvat/ CENVAT Credit taken on that portion of fuel.. He had failed in his duty and taken on that portion of fuel.. He had failed in his duty and taken on that portion of fuel.. He had failed in his duty and rather intentionally did not take action as stated above with rather intentionally did not take action as stated above with rather intentionally did not take action as stated above with duty by way of taking intent to evade Central Excise duty by way of taking intent to evade Central Excise inadmissible Modvat/CENVAT credit. He, thus, appeared liable inadmissible Modvat/CENVAT credit. He, thus, appeared liable inadmissible Modvat/CENVAT credit. He, thus, appeared liable to penal action under Rule 209A of the Central Excise Rules, to penal action under Rule 209A of the Central Excise Rules, to penal action under Rule 209A of the Central Excise Rules, 1944 and Rule 13 of CENVAT Credit Rules.” 1944 and Rule 13 of CENVAT Credit Rules. 3. The show cause notice was issued to the respondent and they filed The show cause notice was issued to the respondent and they filed The show cause notice was issued to the respondent and they filed The show cause notice was issued to the respondent and they filed reply to the same. reply to the same. 4. After considering the reply and after giving personal hearing the After considering the reply and after giving personal hearing the After considering the reply and after giving personal hearing the After considering the reply and after giving personal hearing the learned Commissioner held as under:- learned Commissioner held as under: “13. From the above the following undisputed facts have emerged. 13. From the above the following undisputed facts have emerged. From the above the following undisputed facts have emerged. The Party have installed a captive power plant for generation of The Party have installed a captive power plant for generation of The Party have installed a captive power plant for generation of The Party have installed a captive power plant for generation of electricity and they are using F.O., R.F.O., H.P.S. and L.D.O. as fuel electricity and they are using F.O., R.F.O., H.P.S. and L.D.O. as fuel electricity and they are using F.O., R.F.O., H.P.S. and L.D.O. as fuel electricity and they are using F.O., R.F.O., H.P.S. and L.D.O. as fuel in the D.G. sets installed for this purpose and are availing in the D.G. sets installed for this purpose and are availing in the D.G. sets installed for this purpose and are availing in the D.G. sets installed for this purpose and are availing Modvat/Cenvat credit on F.O., R.F.O., H.P.S. and L.D.0. They have Modvat/Cenvat credit on F.O., R.F.O., H.P.S. and L.D.0. They have Modvat/Cenvat credit on F.O., R.F.O., H.P.S. and L.D.0. They have Modvat/Cenvat credit on F.O., R.F.O., H.P.S. and L.D.0. They have entered into an agreement dated 1.10.90 with Haryana State entered into an agreement dated 1.10.90 with Haryana Stat entered into an agreement dated 1.10.90 with Haryana Stat entered into an agreement dated 1.10.90 with Haryana Stat Electricity Board (HSEB) for parallel operation of the Captive Power Electricity Board (HSEB) for parallel operation of the Captive Power Electricity Board (HSEB) for parallel operation of the Captive Power Electricity Board (HSEB) for parallel operation of the Captive Power Plant by virtue of which their plant was synchronized with the HSEB Plant by virtue of which their plant was synchronized with the HSEB Plant by virtue of which their plant was synchronized with the HSEB Plant by virtue of which their plant was synchronized with the HSEB power generated by their Power Grid. They cleared some part of the power generated by their Power Grid. They cleared some part of the Power Grid. They cleared some part of the ing the power Captive Power Plant to HSEB. The party was also using the power Captive Power Plant to HSEB. The party was also us Captive Power Plant to HSEB. The party was also us supplied by the HSEB on payment. The power exported to HSEB from supplied by the HSEB on payment. The power exported to HSEB from supplied by the HSEB on payment. The power exported to HSEB from supplied by the HSEB on payment. The power exported to HSEB from their plant was adjusted in the bill raised by HSEB after deducting their plant was adjusted in the bill raised by HSEB after deducting their plant was adjusted in the bill raised by HSEB after deducting their plant was adjusted in the bill raised by HSEB after deducting 10% wheeling charges. 10% wheeling charges. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -8- 14. The allegations made by 14. The allegations made by 14. The allegations made by 14. The allegations made by the department are the department are the department are the department are that that that that fuels used in the generation of Modvat/CENVAT Credit availed on the fuels used in the generation of Modvat/CENVAT Credit availed on the Modvat/CENVAT Credit availed on the electricity, cleared by the party to HSEB is liable to be disallowed and electricity, cleared by the party to HSEB is liable to be disallowed and electricity, cleared by the party to HSEB is liable to be disallowed and electricity, cleared by the party to HSEB is liable to be disallowed and recoverable from the party. At the first instance I discuss the recoverable from the party. At the first instance I discuss the recoverable from the party. At the first instance I discuss the recoverable from the party. At the first instance I discuss the the party on F.O., admissibility of Cenvat/modvat credit availed by the party on F.O., admissibility of Cenvat/modvat credit availed admissibility of Cenvat/modvat credit availed L.D.O. used in the generation of electricity. The R.F.O., H.P.S. and L.D.O. used in the generation of electricity. The L.D.O. used in the generation of electricity. The R.F.O., H.P.S. and definition of inputs given under Rule 2(f) of the CENVAT Credit definition of inputs given under Rule 2(f) of the CENVAT Credit definition of inputs given under Rule 2(f) of the CENVAT Credit definition of inputs given under Rule 2(f) of the CENVAT Credit (No.2) Rules, 2001 and 2002 and Rule 2(g) of CENVAT Credit Rules, (No.2) Rules, 2001 and 2002 and Rule 2(g) of CENVAT Credit Rules, (No.2) Rules, 2001 and 2002 and Rule 2(g) of CENVAT Credit Rules, (No.2) Rules, 2001 and 2002 and Rule 2(g) of CENVAT Credit Rules, 2004 is as under: 2004 is as under: "inputs" means all goods, except high speed diesel oil and "inputs" means all goods, except high speed diesel oil an "inputs" means all goods, except high speed diesel oil an motor spirit, commonly known as petrol, used in or in relation motor spirit, commonly known as petrol, used in or in relation motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or to the manufacture of final products whether directly or to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and indirectly and whether contained in the final product or not and indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, includes lubricating oils, greases, cutting oils, coolants, includes lubricating oils, greases, cutting oils, coolants, es of the final products cleared alongwith the final accessories of the final products cleared alongwith the final es of the final products cleared alongwith the final products, goods used as paints, or as packing material, or as products, goods used as paints, or as packing material, or as products, goods used as paints, or as packing material, or as fuel, or for generation of electricity or steam used for fuel, or for generation of electricity or steam used for fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within manufacture of final products or for any other purpose, wit manufacture of final products or for any other purpose, wit the factory of production. oil or motor spirit, Explanation 1: The high speed diesel oil or motor spirit, Explanation 1: The high speed diesel commonly known as petrol, shall not be treated as an input for commonly known as petrol, shall not be treated as an input for commonly known as petrol, shall not be treated as an input for any purpose whatsoever. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -9- used in the manufacture Explanation 2: Inputs includes goods used in the manufacture Explanation 2: Inputs includes goods the factory of the of capital goods which are further used in the factory of the of capital goods which are further used in manufacture." From 15. From From 15. the definition of the definition of the definition of the Inputs, the Inputs, the Inputs, it it it is evident is evident is evident that that that Modvat/Cenvat credit is admissible on the inputs/goods which are Modvat/Cenvat credit is admissible on the inputs/goods which are Modvat/Cenvat credit is admissible on the inputs/goods which are Modvat/Cenvat credit is admissible on the inputs/goods which are used for generation of electricity, used for manufacture of final used for generation of electricity, used for manufacture of final used for generation of electricity, used for manufacture of final used for generation of electricity, used for manufacture of final two products within the factory of production. Thus there are two products within the factory of pr products within the factory of pr conditions/legs conditions/legs conditions/legs conditions/legs for allowing Modvat/ Cenvat Credit on for allowing Modvat/ Cenvat Credit on for allowing Modvat/ Cenvat Credit on for allowing Modvat/ Cenvat Credit on the the the the inputs/goods inputs/goods for the generation of electricity i.e. (1) inputs/goods inputs/goods for the generation of electricity i.e. (1) inputs/goods for the generation of electricity i.e. (1) the generation of electricity; and (ii) such should be used for the generation of electricity; and (ii) such the generation of electricity; and (ii) such should be used for manufacture of final products within electricity should be used for the manufacture of final products within manufacture of final products within electricity should be used for the observe that the said party have fulfilled the factory of production. I observe that the said party have fulfilled observe that the said party have fulfilled the factory of production. the first condition/leg because they have used the inputs/goods on the first condition/leg because they have used the inputs/goods on the first condition/leg because they have used the inputs/goods on the first condition/leg because they have used the inputs/goods on which they have taken Modvat/Cenvat Credit for the generation of which they have taken Modvat/Cenvat Credit for the generation of which they have taken Modvat/Cenvat Credit for the generation of which they have taken Modvat/Cenvat Credit for the generation of t they have failed to fulfill the second condition/leg electricity. But they have failed to fulfill the second condition/leg t they have failed to fulfill the second condition/leg electricity. Bu generated and exported to because they have not used electricity so generated and exported to because they have not used electricity because they have not used electricity HSEB for the manufacture of their final products or for any other HSEB for the manufacture of their final products or for any other HSEB for the manufacture of their final products or for any other HSEB for the manufacture of their final products or for any other purpose within their factory of production purpose . The department in the within their factory of production. The department in the how cause notice has not disputed show cause notice has not disputed how cause notice has not disputed how cause notice has not disputed the admissibility of the admissibility of the admissibility of the admissibility of Cenvat/modvat credit on F.O., R.F.O., H.P.S. and L.D.O. used in the Cenvat/modvat credit on F.O., R.F.O., H.P.S. and L.D.O. used in the Cenvat/modvat credit on F.O., R.F.O., H.P.S. and L.D.O. used in the Cenvat/modvat credit on F.O., R.F.O., H.P.S. and L.D.O. used in the generation of electricity. Therefore, the contentions of the party generation of electricity. Therefore, the contentions of the party generation of electricity. Therefore, the contentions of the party generation of electricity. Therefore, the contentions of the party The regarding admissibility of Cenvat/modvat credit are insignificant. The regarding admissibility of Cenvat/modvat credit are insignificant. regarding admissibility of Cenvat/modvat credit are insignificant. in respect of the amount of Cenvat/modvat credit only dispute is in respect of the amount of Cenvat/modvat credit in respect of the amount of Cenvat/modvat credit only dispute availed on the inputs used in the generation of electricity exported to availed on the inputs used in the generation of electricity exported to availed on the inputs used in the generation of electricity exported to availed on the inputs used in the generation of electricity exported to TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -10- HSEB as the same has not been used in the manufacture of final HSEB as the same has not been used in the manufacture of final HSEB as the same has not been used in the manufacture of final HSEB as the same has not been used in the manufacture of final d under the second product within the factory of production as required under the second product within the factory of production as require product within the factory of production as require leg of the definition of inputs under Rule 2(f)/2(g) of the Rules, ibid. leg of the definition of inputs under Rule 2(f)/2(g) of the Rules, ibid. leg of the definition of inputs under Rule 2(f)/2(g) of the Rules, ibid. leg of the definition of inputs under Rule 2(f)/2(g) of the Rules, ibid. The party in their reply have stressed that they have been exporting The party in their reply have stressed that they have been exporting The party in their reply have stressed that they have been exporting The party in their reply have stressed that they have been exporting power to HSEB to remove the fluctuations and other short coming in power to HSEB to remove the fluctuations and other short coming in power to HSEB to remove the fluctuations and other short coming in power to HSEB to remove the fluctuations and other short coming in the power generated by their D.G. Sets since the same the power generated by their be used D.G. Sets since the same cannot be used as it is and they are receiving back equal quantity of power from as it is and they are receiving back equal quantity of power from as it is and they are receiving back equal quantity of power from as it is and they are receiving back equal quantity of power from HSEB. However, as per the conditions of the agreement between the HSEB. However, as per the conditions of the agreement between the HSEB. However, as per the conditions of the agreement between the HSEB. However, as per the conditions of the agreement between the HSEB and the party the contentions raised by the party did not HSEB and the party the contentions raised by the party did not HSEB and the party the contentions raised by the party did not HSEB and the party the contentions raised by the party did not appear to be correct. No such clause appear in the agreement. appear to be correct On the . No such clause appear in the agreement. On the contrary as per clause XIV of the agreement "the power generated contrary as per clause XIV of the agreement "the power generated contrary as per clause XIV of the agreement "the power generated contrary as per clause XIV of the agreement "the power generated and pumped into the HSEB grid from the captive generating unit will and pumped into the HSEB grid from the captive generating unit will and pumped into the HSEB grid from the captive generating unit will and pumped into the HSEB grid from the captive generating unit will during the billing month". From this clause it is be accounted for during the billing month". From this clause it is during the billing month". From this clause it is be accounted for hat the party has been exporting power to HSEB and the same clear that the party has been exporting power to HSEB and the same hat the party has been exporting power to HSEB and the same clear t was being adjusted in their electricity bill. The fact is further clarified was being adjusted in their electricity bill. The fact is further clarified was being adjusted in their electricity bill. The fact is further clarified was being adjusted in their electricity bill. The fact is further clarified from the letter of AEE 'OP' S/D M. Town (DHBVNL), Hisar enclosed from the letter of AEE 'OP' S/D M. Town (DHBVNL), Hisar enclosed from the letter of AEE 'OP' S/D M. Town (DHBVNL), Hisar enclosed from the letter of AEE 'OP' S/D M. Town (DHBVNL), Hisar enclosed as Annexure-3 to the show cause notice wherein the AEE as Annexure has termed 3 to the show cause notice wherein the AEE has termed the power injected by the party in their system as power purchased by the power injected by the party in their system as power purchased by the power injected by the party in their system as power purchased by the power injected by the party in their system as power purchased by the Nigam. From the above it is established that the party was selling the Nigam. From the above it is established that the party was selling the Nigam. From the above it is established that the party was selling the Nigam. From the above it is established that the party was selling a part of the power generated in their power plant to HSEB and the a part of the power generated in their power plant to HSEB and the a part of the power generated in their power plant to HSEB and the a part of the power generated in their power plant to HSEB and the their monthly bill as per the cost of this power was deducted from their monthly bill as per the cost of this power was deducted from cost of this power was deducted from agreement. Therefore, the party have not used such electricity agreement. Therefore, the party have not used such electricity agreement. Therefore, the party have not used such electricity agreement. Therefore, the party have not used such electricity generated by them in the manufacture of their final product but have generated by them in the manufacture of their final product but have generated by them in the manufacture of their final product but have generated by them in the manufacture of their final product but have sold the same to HSEB and hence the Cenvat/modvat credit availed sold the same to HSEB and hence the Cenvat/modvat credit availed sold the same to HSEB and hence the Cenvat/modvat credit availed sold the same to HSEB and hence the Cenvat/modvat credit availed TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -11- eration of such electricity is inadmissible on the inputs used in the generation of such electricity is inadmissible eration of such electricity is inadmissible on the inputs used in the gen under Rules 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of under Rules 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of under Rules 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of under Rules 57A, 57B of Central Excise Rules, 1944, 57AB, 57AA of Central Excise (2nd amendment) Rules, 2000 and Rule 2 and 3 of the Central Excise (2nd amendment) Rules, 2000 and Rule 2 and 3 of the Central Excise (2nd amendment) Rules, 2000 and Rule 2 and 3 of the Central Excise (2nd amendment) Rules, 2000 and Rule 2 and 3 of the CENVAT Credit Rules, 2001, 2002 and 2004. CENVAT Credit Rules, 2001, 2002 and 2004. CENVAT Credit Rules, 2001, 2002 and 2004. 16. 16. bmitted the circumstances under In their reply the party have submitted the circumstances under In their reply the party have su which they had not make arrangements for clearance of electricity which they had not make arrangements for clearance of electricity which they had not make arrangements for clearance of electricity which they had not make arrangements for clearance of electricity generated by them in their captive power plant to HSEB as the generated by them in their captive power plant to HSEB as the generated by them in their captive power plant to HSEB as the generated by them in their captive power plant to HSEB as the electricity produced by them was not usable by them. The feasibility electricity produced by them was not usable by them. The feasibility electricity produced by them was not usable by them. The feasibility electricity produced by them was not usable by them. The feasibility itted by them in support of their report of TCE has been submitted by them in support of their itted by them in support of their report of TCE has been subm contention. They have tried to establish that they export the electricity contention. They have tried to establish that they export the electricity contention. They have tried to establish that they export the electricity contention. They have tried to establish that they export the electricity generated by them to HSEB and receive the same back in usable generated by them to HSEB and receive the same back in usable generated by them to HSEB and receive the same back in usable generated by them to HSEB and receive the same back in usable condition but this plea of the party also does not hold good since they condition but this plea of the party also does not hold good since they condition but this plea of the party also does not hold good since they condition but this plea of the party also does not hold good since they ing whole of the electricity so generated but only a part are not exporting whole of the electricity so generated but only a part ing whole of the electricity so generated but only a part are not export of the same. Further as per the statement given by HSEB regarding of the same. Further as per the statement given by HSEB regarding of the same. Further as per the statement given by HSEB regarding of the same. Further as per the statement given by HSEB regarding wise report it is evident that all the power generated month wise/ year wise report it is evident that all the power generated wise report it is evident that all the power generated month ared to by Captive Power Plant of M/s JSL, Hisar is not exported/cleared to by Captive Power Plant of M/s JSL, Hisar is not exported/cle by Captive Power Plant of M/s JSL, Hisar is not exported/cle the HSEB Grid. But the arrangement of synchronization is such that the HSEB Grid. But the arrangement of synchronization is such that the HSEB Grid. But the arrangement of synchronization is such that the HSEB Grid. But the arrangement of synchronization is such that only the excess power is being injected/cleared out to HSEB Grid only the excess power is being injected/cleared out to HSEB Grid only the excess power is being injected/cleared out to HSEB Grid only the excess power is being injected/cleared out to HSEB Grid from their factory. from their factory. 17. Another contention raised by the party is that since no facts were 17. Another contention raised by the party is that since no facts were 17. Another contention raised by the party is that since no facts were 17. Another contention raised by the party is that since no facts were Departmental authorities as has been alleged in suppressed from the Departmental authorities as has been alleged in Departmental authorities as has been alleged in suppressed is not the Show Cause Notice so extended period of limitation is not the Show Cause Notice so extended period of limitation the Show Cause Notice so extended period of limitation generation of electricity by the party invokable. The facts of captive generation of electricity by the party generation of electricity by the party invokable. The were in the knowledge of the department since the audit has visited were in the knowledge of the department since the audit has visited were in the knowledge of the department since the audit has visited were in the knowledge of the department since the audit has visited TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -12- d they were availing the credit of duty paid on D.G. Sets. They them and they were availing the credit of duty paid on D.G. Sets. They d they were availing the credit of duty paid on D.G. Sets. They them an further contended that the departmental authorities had vide letter further contended that the departmental authorities had vide letter further contended that the departmental authorities had vide letter further contended that the departmental authorities had vide letter dt.15.11.2000 specifically asked them to furnish information about dt.15.11.2000 specifically asked them to furnish information about dt.15.11.2000 specifically asked them to furnish information about dt.15.11.2000 specifically asked them to furnish information about nd they agreement entered into with the State Electricity Board and they agreement entered into with the State Electricity Board a agreement entered into with the State Electricity Board a submitted the various details. I have gone through the documents submitted the various details. I have gone through the documents submitted the various details. I have gone through the documents submitted the various details. I have gone through the documents produced by the party in support of this contention raised by them. I produced by the party in support of this contention raised by them. I produced by the party in support of this contention raised by them. I produced by the party in support of this contention raised by them. I observe that the audit of their record was conducted and from the observe that the audit of their record was conducted and from the observe that the audit of their record was conducted and from the observe that the audit of their record was conducted and from the aid on the D.G. Sets it availment of Cenvat/modvat credit on the duty paid on the D.G. Sets it availment of Cenvat/modvat credit on the duty p availment of Cenvat/modvat credit on the duty p should have been in the knowledge of the department that the party should have been in the knowledge of the department that the party should have been in the knowledge of the department that the party should have been in the knowledge of the department that the party was engaged in the captive generation of electricity but the party has was engaged in the captive generation of electricity but the party has was engaged in the captive generation of electricity but the party has was engaged in the captive generation of electricity but the party has not produced any documentary evidence to suggest that the existence not produced any documentary evidence to suggest that the existence not produced any documentary evidence to suggest that the existence not produced any documentary evidence to suggest that the existence HSEB was in the knowledge of of their agreement with the HSEB was in the knowledge of HSEB was in the knowledge of of their agreement with th department. They have also not been able to produce any evidence to department. They have also not been able to produce any evidence to department. They have also not been able to produce any evidence to department. They have also not been able to produce any evidence to prove that they had supplied the information asked for the department prove that they had supplied the information asked for the department prove that they had supplied the information asked for the department prove that they had supplied the information asked for the department vide letter dt.15.11.2000. Therefore, I observe that vide letter dt.15.11.2000. the party's Therefore, I observe that the party's contentions are not tenable and they have suppressed all these contentions are not te facts nable and they have suppressed all these facts Department and did not inform any communication to the from the Department and did not inform any communication to the Department and did not inform any communication to the from the Department that they were clearing/injecting electricity generated by Department that they were clearing/injecting electricity generated by Department that they were clearing/injecting electricity generated by Department that they were clearing/injecting electricity generated by them in their captive power plant to the Grid of HSEB. It is them in their captive power plant to the Grid of HSEB. It is them in their captive power plant to the Grid of HSEB. It is them in their captive power plant to the Grid of HSEB. It is at this act of omission and commission of the party established that this act of omission and commission of the party at this act of omission and commission of the party established th tantamount to suppression of facts from the Department with the tantamount to suppression of facts from the Department with the tantamount to suppression of facts from the Department with the tantamount to suppression of facts from the Department with the intention intention intention intention to evade payment of duty by wrongly availing to evade payment of duty by wrongly availing to evade payment of duty by wrongly availing to evade payment of duty by wrongly availing Modvat/Cenvat credit on the fuel used in the generation of electricity Modvat/Cenvat credit on the fuel used in the generation of electricity Modvat/Cenvat credit on the fuel used in the generation of electricity Modvat/Cenvat credit on the fuel used in the generation of electricity TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -13- rted to HSEB (now DHBVNL) and therefore, longer which was exported to HSEB (now DHBVNL) and therefore, longer rted to HSEB (now DHBVNL) and therefore, longer which was expo period of five years has been correctly invoked in this case. period of five years has been correctly invoked in this case. period of five years has been correctly invoked in this case. * * * * 25. As regard the quantum of good/fuel used in the generation of 25. As regard the quantum of good/fuel used in the generation of 25. As regard the quantum of good/fuel used in the generation of 25. As regard the quantum of good/fuel used in the generation of electricity which was exported/cleared to the HSEB and amount of electricity which was exported/cleared to the HSEB and amount of electricity which was exported/cleared to the HSEB and amount of electricity which was exported/cleared to the HSEB and amount of Rs.4,22,06,993/ .4,22,06,993/- involved in such goods/fuel (ad detailed in the Show involved in such goods/fuel (ad detailed in the Show Cause Notice) in respect of show cause notice dt.30.12.2003, Cause Notice) in respect of show cause notice dt.30.12.2003, Cause Notice) in respect of show cause notice dt.30.12.2003, Cause Notice) in respect of show cause notice dt.30.12.2003, Rs.70,74,874/- Rs.70,74,874/ in in in respect respect respect show cause notice dt.28.6.2004, show cause notice dt.28.6.2004, show cause notice dt.28.6.2004, in respect of show cause notice dt.28.12.2004, and Rs.78,06,003/- in respect of show cause notice dt.28.12.2004, and in respect of show cause notice dt.28.12.2004, and Rs.78,06,003/ in respect of show cause notice dt.27.6.2005, I find Rs.87,20,836/- in respect of show cause notice dt.27.6.2005, I find in respect of show cause notice dt.27.6.2005, I find Rs. that the party have not disputed the same either in the reply to the that the party have not disputed the same either in the reply to the that the party have not disputed the same either in the reply to the that the party have not disputed the same either in the reply to the SCN or at the time of personal hearing SCN or at the time of personal hearing. * * * * 29. 29.
Decision
In view of the above discussions and findings and have regard In view of the above discussions and findings and have regard In view of the above discussions and findings and have regard llowing order: to the facts and circumstances of the case I pass the following order: to the facts and circumstances of the to the facts and circumstances of the (I) I disallow Modvat/CENVAT Credit amounting Rs.4,22,06,993/ (I) I disallow Modvat/CENVAT Credit (I) I disallow Modvat/CENVAT Credit amounting Rs.4,22,06,993/- Two Lacs Six Thousand Nine Hundred (Rupees Four Crores Twenty-Two Lacs Six Thousand Nine Hundred Two Lacs Six Thousand Nine Hundred (Rupees Four Crores Twenty and Ninety-Three only for the period Jan. 99 to June 03 and and Ninety order for Three only for the period Jan. 99 to June 03 and order for recovery of the same from the said party under Rule 571(1)(11) of recovery of the same from the said party under Rule 571(1)(11) of recovery of the same from the said party under Rule 571(1)(11) of recovery of the same from the said party under Rule 571(1)(11) of 2nd Central Excise Rules, 1944, Rule 57AH (2) of the Central Excise (2nd Central Excise Rules, 1944, Rule 57AH (2) Central Excise Rules, 1944, Rule 57AH (2) amendment) Rules, 2000 and Rule 12 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 12 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 12 of CENVAT Credit Rules, 2001 amendment) Rules, 2000 and Rule 12 of CENVAT Credit Rules, 2001 of Central Excise Act, and 2002 read with proviso to Section 11A (1) of Central Excise Act, and 2002 read with proviso to Section 11A (1) and 2002 read with proviso to Section 11A (1) 1944, by invoking extended period of five years as proposed in show 1944, by invoking extended period of five years as proposed in show 1944, by invoking extended period of five years as proposed in show 1944, by invoking extended period of five years as proposed in show cause notice dt. 30.12.2003. cause notice dt. 30.12.2003. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -14- (Rupees (II) I disallow CENVAT Credit amounting to Rs.70,74,874/- (Rupees (II) I disallow CENVAT Credit amounting to Rs.70 (II) I disallow CENVAT Credit amounting to Rs.70 Seventy Lacs Seventy Four Thousand Eight Hundred and Seventy four Seventy Lacs Seventy Four Thousand Eight Hundred and Seventy four Seventy Lacs Seventy Four Thousand Eight Hundred and Seventy four Seventy Lacs Seventy Four Thousand Eight Hundred and Seventy four (Rupees Seventy Eight Lacs Six Thousand only) and Rs. 78,06,003/- (Rupees Seventy Eight Lacs Six Thousand (Rupees Seventy Eight Lacs Six Thousand only and Three only) and order for recovery of the same from the said and Three only) and order for recovery of the same from the said and Three only) and order for recovery of the same from the said and Three only) and order for recovery of the same from the said party under Rule 12 of the Cenvat Credit Rules, 2002 as proposed in party under Rule 12 of the Cenvat Credit Rules, 2002 as proposed in party under Rule 12 of the Cenvat Credit Rules, 2002 as proposed in party under Rule 12 of the Cenvat Credit Rules, 2002 as proposed in the show Cause notice dt. 28.06.2004 and 28.12.2004 respectiv the show Cause notice dt. 28.06.2004 and 28.12.2004 respectively. (111) 1 disallow CENVAT Credit amounting to Rs.87,20,836/ (111) 1 disallow CENVAT Credit (111) 1 disallow CENVAT Credit Rs.87,20,836/- (Rupees Eighty Seven Lacs Twenty Thousand Eight Hundred and (Rupees Eighty Seven Lacs Twenty Thousand Eight Hundred and (Rupees Eighty Seven Lacs Twenty Thousand Eight Hundred and (Rupees Eighty Seven Lacs Twenty Thousand Eight Hundred and Thirty Six only) and order for recovery of the same from the said Thirty Six only) and order for recovery of the same from the said Thirty Six only) and order for recovery of the same from the said Thirty Six only) and order for recovery of the same from the said party under Rule 12 of the Cenvat Credit Rules, 2002 and Rule 14 of party under Rule 12 of the Cenvat Credit Rules, 2002 and Rule 14 o party under Rule 12 of the Cenvat Credit Rules, 2002 and Rule 14 o party under Rule 12 of the Cenvat Credit Rules, 2002 and Rule 14 o the Cenvat Credit Rules, 2004 as proposed in the show cause notice the Cenvat Credit Rules, 2004 as proposed in the show cause notice the Cenvat Credit Rules, 2004 as proposed in the show cause notice the Cenvat Credit Rules, 2004 as proposed in the show cause notice dt.27.06.2005. dt.27.06.2005. (IV) I impose a penalty of Rs.4,22,06,993/ (IV) I impose Crores Rs.4,22,06,993/- (Rupees Four Crores Three Twenty Two Lacs Six Thousand Nine Hundred and Ninety- Three Twenty Two Lacs Six Thousand Nine Hundred and Ninety Twenty Two Lacs Six Thousand Nine Hundred and Ninety Rule, 1944, only) upon the party under Rule 571(4) of Central Excise Rule, 1944, only) upon the party under Rule 571(4) of Centra only) upon the party under Rule 571(4) of Centra Rule 57AH (2) of Central Excise (2nd Rule 57AH (2) of amendment) Rules, 2000 and Central Excise (2nd amendment) Rules, 2000 and Rule 13 (2) of CENVAT Credit Rules, 2001 and 2002 read with Rule 13 (2) of CENVAT Credit Rules, 2001 and 2002 read with Rule 13 (2) of CENVAT Credit Rules, 2001 and 2002 read with Rule 13 (2) of CENVAT Credit Rules, 2001 and 2002 read with notice Section 11AC of the Central Excise Act, 1944 respect of show notice Section 11AC of the Central Excise Act, 1944 respect Section 11AC of the Central Excise Act, 1944 respect dt.30.12.2003. dt.30.12.2003. (V) 1 Am also Impose penalty Rs.5,00,000/ (V) 1 Am also Impose penalt (Rupees Five Lacs only) y Rs.5,00,000/- (Rupees Five Lacs only) upon the party under Rule 1730 (1) (bb) Rules, 1944 of for Central upon the party under Rule 1730 (1) (bb) Rules, 1944 of for Central upon the party under Rule 1730 (1) (bb) Rules, 1944 of for Central upon the party under Rule 1730 (1) (bb) Rules, 1944 of for Central Excise the aforesaid violation of Rules in respect of show cause notice Excise the aforesaid violation of Rules in respect of show cause notice Excise the aforesaid violation of Rules in respect of show cause notice Excise the aforesaid violation of Rules in respect of show cause notice dt.30.12.2003. dt.30.12.2003. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -15- (VI) I also order for recovery of interest on Rs.6,58,08,706/ (VI) I also order for recovery of (VI) I also order for recovery of Rs.6,58,08,706/- (Rs.4,22,06,993/- Rs.7074874/- + Rs.7806003/ (Rs.4,22,06,993/ ) (at + Rs.7806003/-+ Rs.8720836/-) (at the applicable/ appropriate rate of interest from time to time) from the the applicable/ appropriate rate of interest from time to time) from the the applicable/ appropriate rate of interest from time to time) from the the applicable/ appropriate rate of interest from time to time) from the said party under Rule 571 (5) of Central Excise Rules, 1944, Rule said party under Rule 571 (5) of Central Excise Rules, 1944, Rule said party under Rule 571 (5) of Central Excise Rules, 1944, Rule said party under Rule 571 (5) of Central Excise Rules, 1944, Rule 000 and Rule 12 57AH (1) of Central Excise (2nd amendment) rules, 2000 and Rule 12 57AH (1) of Central Excise (2nd amendment) rules, 2 57AH (1) of Central Excise (2nd amendment) rules, 2 of the CENVAT Credit Rules, 2001 and 2002 and Rule 14 of the of the CENVAT Credit Rules, 2001 and 2002 and Rule 14 of the of the CENVAT Credit Rules, 2001 and 2002 and Rule 14 of the of the CENVAT Credit Rules, 2001 and 2002 and Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11AB of the Central Cenvat Credit Rules, 2004 read with Section 11AB of the Central Cenvat Credit Rules, 2004 read with Section 11AB of the Central Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944. Excise Act, 1944. I also impose a penalty Rs.1.50 Crores (Rupees One Crore (VII) I also impose a penalty Rs.1.50 Crores (Rupees One Crore I also impose a penalty Rs.1.50 Crores (Rupees One Crore (VII) Rule 13 of the Cenvat Credit Rules, Fifty Lacs) upon the party under Rule 13 of the Cenvat Credit Rules, Rule 13 of the Cenvat Credit Rules, Fifty Lacs) upon the party under 2001 and 2002 and Rule 15 of the Cenvat Credit Rules, 2004 for the 2001 and 2002 and Rule 15 of the Cenvat Credit Rules, 2004 for the 2001 and 2002 and Rule 15 of the Cenvat Credit Rules, 2004 for the 2001 and 2002 and Rule 15 of the Cenvat Credit Rules, 2004 for the aforesaid violation of Rules in respect of show cause notices dt. aforesaid violation of Rules in respect of show cause notices dt. aforesaid violation of Rules in respect of show cause notices dt. aforesaid violation of Rules in respect of show cause notices dt. 28.06.2004 and 27.06.2005. 28.06.2004 and 27.06.2005. nly) on (VIII) I impose Penalty of Rs.5,00,000/- (Rupees Five Lacs only) on (VIII) I impose Penalty of Rs.5,00,000/ (VIII) I impose Penalty of Rs.5,00,000/ Shri R.K. Gupta, General Manager of the Company under Rule 209A Shri R.K. Gupta, General Manager of the Company under Rule 209A Shri R.K. Gupta, General Manager of the Company under Rule 209A Shri R.K. Gupta, General Manager of the Company under Rule 209A of the Central Excise Rules, 13(1) of CENVAT Credit Rules, 2001 and of the Central Excise Rules, 13(1) of CENVAT Credit Rules, 2001 and of the Central Excise Rules, 13(1) of CENVAT Credit Rules, 2001 and of the Central Excise Rules, 13(1) of CENVAT Credit Rules, 2001 and 2002. 2002. 5. Original The respondent challenged the above referred to Order-in-Original The respondent challenged the above referred to Order The respondent challenged the above referred to Order ner of Central Excise, Rohtak by filing dated 30.11.2005 passed by the Commissioner of Central Excise, Rohtak by filing ner of Central Excise, Rohtak by filing dated 30.11.2005 passed by the Commissio an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New Delhi and the same was allowed by the learned Tribunal. Delhi and the same was allowed by the learned Tribunal. Delhi and the same was allowed by the learned Tribunal. 6. Hence the present appeal. Hence the present appeal. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -16- 7. Learned counsel for the appellant contends that :- Learned counsel for the appellant contends t Learned counsel for the appellant contends t a) he findings of the Tribunal are factually incorrect and the The findings of the Tribunal are factually incorrect and the he findings of the Tribunal are factually incorrect and the relied upon by relevant clauses of the agreement and evidence relied upon by relevant clauses of the agreement and relevant clauses of the agreement and adjudicating authority has not been adjudicating authority been dealt with or considered b) The findings of the learned Tribunal that respondent received Tribunal that respondent received to HSEB is also the same quantity of electricity which was cleared to HSEB is also the same quantity of electricity which was clear the same quantity of electricity which was clear factually incorrect and contrary to the facts on record. The details of factually incorrect and contrary to the facts on record. The details of factually incorrect and contrary to the facts on record. The details of factually incorrect and contrary to the facts on record. The details of record of electricity supplied by the respondent to HSEB and received record of electricity supplied by the respondent to HSEB and received record of electricity supplied by the respondent to HSEB and received record of electricity supplied by the respondent to HSEB and received ondent from HSEB was the relied upon documents to the by the respondent from HSEB was the relied upon documents to the ondent from HSEB was the relied upon documents to the by the resp impugned show cause notice, which clearly showed that the quantity impugned show cause notice, which clearly showed that the quantity impugned show cause notice, which clearly showed that the quantity impugned show cause notice, which clearly showed that the quantity of electricity received and supplied by the respondent are different. of electricity received and supplied by the respondent are different. of electricity received and supplied by the respondent are different. of electricity received and supplied by the respondent are different. c) The case of the department is that the electricity generated The case of the department is the electricity generated in captive plant was not used in or relation to manufacture of final captive plant was not used in or relation to manufacture of final captive plant was not used in or relation to manufacture of final captive plant was not used in or relation to manufacture of final products within the factory of production and rather sold to HSEB. products within the factory of production and rather sold to HSEB. products within the factory of production and rather sold to HSEB. products within the factory of production and rather sold to HSEB. As per explanation introduced in notification number 4/94 dated As per explanation introduced in notification number 4/94 dated As per explanation introduced in notification number 4/94 dated As per explanation introduced in notification number 4/94 dated credit, 01.03.1994 inputs used as fuel were entitled to Modvat credit, 01.03.1994 inputs used as fuel were entitled to Modvat 01.03.1994 inputs used as fuel were entitled to Modvat such fuels are either utilised directly or indirectly for provided such fuels are either utilised directly or indirectly for such fuels are either utilised directly or indirectly for provided generating electricity, as an intermediary product, and is integrally generating electricity, as an intermediary product, and is integrally generating electricity, as an intermediary product, and is integrally generating electricity, as an intermediary product, and is integrally connected with several operations, which result in emergence of the connected with several operations, which result in emergence of the connected with several operations, which result in emergence of the connected with several operations, which result in emergence of the , fuels used in the captive final product, however, in the instant case, fuels used in the captive final product, however, in the instant case final product, however, in the instant case plant for generating electricity, which was sold to Haryana State plant for generating electricity, which was sold to Haryana State plant for generating electricity, which was sold to Haryana State plant for generating electricity, which was sold to Haryana State was not at all connected with the operations leading Electricity Board was not at all connected with the operations leading was not at all connected with the operations leading Electricity Board to emergence of the final product. to emergence of the final product. TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -17- 8. Per contra, learned counsel for the respondent Per contra, contends that they learned counsel for the respondent contends that they were exporting power to HSEB to remove fluctuations and other shortcomings in were exporting power to HSEB to remove fluctuations and other shortcomings in were exporting power to HSEB to remove fluctuations and other shortcomings in were exporting power to HSEB to remove fluctuations and other shortcomings in the power generated by their DG sets since the same cannot be used as it is and the power generated by their DG sets since the same cannot be used as it is and the power generated by their DG sets since the same cannot be used as it is and the power generated by their DG sets since the same cannot be used as it is and . Therefore, they are they were receiving back equal quantity of power from HSEB. Therefore, they are they were receiving back equal quantity of power from HSEB they were receiving back equal quantity of power from HSEB availed on fuel used in generation of electricity. entitled to CENVAT Credit availed on fuel used in generation of electricity. entitled to CENVAT Credit 9. We have heard learned counsel for the parties and perused the whole We have heard learned counsel for the parties and perused the whole We have heard learned counsel for the parties and perused the whole We have heard learned counsel for the parties and perused the whole record of the case. record of the case. 10. passed by Relevant portion of the impugned order dated 21.08.2008 passed by Relevant portion of the impugned order dated 21.08.2008 Relevant portion of the impugned order dated 21.08.2008 the learned Tribunal ribunal is reproduced as under:- We find that the appellants availed credit in respect of inputs in “5. We find that the appellants availed credit in respect of inputs in We find that the appellants availed credit in respect of inputs in “5. of electricity. The appellants entered into an agreement generation of electricity. The appellants entered into an agreement of electricity. The appellants entered into an agreement generation with the State Electricity Board termed as Wheeling Agreement by with the State Electricity Board termed as Wheeling Agreement by with the State Electricity Board termed as Wheeling Agreement by with the State Electricity Board termed as Wheeling Agreement by were permitted to clear the electricity generated which the appellants were permitted to clear the electricity generated were permitted to clear the electricity generated which the appellan in the captive power plant and simultaneously to receive equal in the captive power plant and simultaneously to receive equal in the captive power plant and simultaneously to receive equal in the captive power plant and simultaneously to receive equal quantity of electricity from the electricity board. The fact that the quantity of electricity from the electricity board. The fact that the quantity of electricity from the electricity board. The fact that the quantity of electricity from the electricity board. The fact that the appellant received same quantity of electricity which were cleared to appellant received same quantity of electricity which were cleared to appellant received same quantity of electricity which were cleared to appellant received same quantity of electricity which were cleared to the electricity board is not in dispute. This agreement was made as the electricity board is not in dispute. This agreement was made as the electricity board is not in dispute. This agreement was made as the electricity board is not in dispute. This agreement was made as the electricity generated in the captive power plant is fluctuating type the electricity generated in the captive power plant is fluctuating type the electricity generated in the captive power plant is fluctuating type the electricity generated in the captive power plant is fluctuating type and as such power cannot be used in the Arch Furnace, Strip Mill and and as such power cannot be used in the Arch Furnace, Strip Mill and and as such power cannot be used in the Arch Furnace, Strip Mill and and as such power cannot be used in the Arch Furnace, Strip Mill and city board was to Grooming Mill. The agreement with the electricity board was to Grooming Mill. The agreement with the electri Grooming Mill. The agreement with the electri maintain uniform frequency of electricity. In these situation as the maintain uniform frequency of electricity. In these situation as the maintain uniform frequency of electricity. In these situation as the maintain uniform frequency of electricity. In these situation as the inputs used in generation of electricity which was cleared to the State inputs used in generation of electricity which was cleared to the State inputs used in generation of electricity which was cleared to the State inputs used in generation of electricity which was cleared to the State Electricity Board and the same quantity was received back from the Electricity Board and the same quantity was received back from the Electricity Board and the same quantity was received back from the Electricity Board and the same quantity was received back from the the manufacture of excisable goods electricity board and used in the manufacture of excisable goods the manufacture of excisable goods electricity board and used in TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document CEA-84-2009 (O&M) (O&M) -18- cleared on payment of duty we find that the demand on the ground cleared on payment of duty we find that the demand on the ground cleared on payment of duty we find that the demand on the ground cleared on payment of duty we find that the demand on the ground that the inputs were used in generation of electricity which was that the inputs were used in generation of electricity which was that the inputs were used in generation of electricity which was that the inputs were used in generation of electricity which was cleared outside the factory of production is not sustainable. cleared outside the factory of production is not sustainable. cleared outside the factory of production is not sustainable. cleared outside the factory of production is not sustainable. Therefore, appeals are allowed.” Therefore, appeals are allo 11. A perusal of the above shows that the dispute in the present case is A perusal of the above shows that the dispute in the present case is A perusal of the above shows that the dispute in the present case is A perusal of the above shows that the dispute in the present case is that the electricity generated in captive plant was not used in or relation to that the electricity generated in captive plant was not used in or relation to that the electricity generated in captive plant was not used in or relation to that the electricity generated in captive plant was not used in or relation to manufacture of final products within the factory of production but was sold to manufacture of final products within the factory of production but was sold to manufacture of final products within the factory of production but was sold to manufacture of final products within the factory of production but was sold to ed Tribunal did not decide this dispute and held that there is ed Tribunal did not decide this dispute and held that there HSEB whereas learned Tribunal did not decide this dispute and held that there HSEB whereas learn no dispute with regard to the appellant receiving same quantity of electricity which no dispute with regard to the appellant receiving same quantity of electricity which no dispute with regard to the appellant receiving same quantity of electricity which no dispute with regard to the appellant receiving same quantity of electricity which was cleared to the Electricity Board, therefore, the issue in dispute was never was cleared to the Electricity Board, therefore, the issue in dispute was never was cleared to the Electricity Board, therefore, the issue in dispute was never was cleared to the Electricity Board, therefore, the issue in dispute was never decided by the learned Tribunal. decided by the learned Tribunal. 12. for the parties agreed During the course of arguments both the counsel for the parties agreed During the course of arguments both the counsel During the course of arguments both the counsel that the matter be remanded back to the learned Tribunal to decide the above that the matter be remanded back to the learned Tribunal to decide the above that the matter be remanded back to the learned Tribunal to decide the above that the matter be remanded back to the learned Tribunal to decide the above referred to issue in dispute. referred to issue in dispute. 13. , the matter is remanded back to the learned In view of the above, the matter is remanded back to the learned , the matter is remanded back to the learned In view of the Tribunal to decide the dispute as referred to above in Tribunal to decide the dispute as referred to above in para 11 of this judgment. 14. 15. Disposed of accordingly. Disposed of accordingly. Pending applications, if any, also stand disposed of. Pending applications, if any, also stand disposed of. Pending applications, if any, also stand disposed of. ARUN PALLI) (ARUN PALLI JUDGE January 28, 2025 2025 tripti (SUDEEPTI SHARMA) JUDGE speaking : Speaking Whether speaking/non-speaking : Speaking Whether speaking/non : Yes : Y Whether reportable Whether reportable TRIPTI SAINI 2025.01.29 14:16 I attest to the accuracy and integrity of this document