UNION OF INDIA Vs. HEG LTD

JUDGEMENT

(1.) The appellant has preferred this appeal under Section 35G of the Central Excise Act, 1944 (for brevity 'the Act') against the impugned order passed by the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi (for short 'the Tribunal') on following substantial questions of law :-

(2.) Briefly stated facts of the case, as detailed in the order of Commissioner (Appeals), are that the respondent has thermal power plant of 12.8 MW capacity installed in their factory premises, the power plant has 3 boilers which run on steam turbine and the generator. 2 boilers are "Waste Heat Recovery" type in which waste hot gases coming from sponge iron kiln are used for production of steam. The 3rd boiler is "Fluidised Bed Combustion" type, in which coal, fire, char, dolochar are used as solid fuels. The steam generated in these boilers is used for running the steam generator to generate electricity. The electricity so generated is partly used by the respondent in their factory for manufacture of sponge iron and a major part of it is supplied outside through the distribution lines of MPFB.

(3.) During July to August, 2004, the respondent had availed Cenvat Credit amounting to Rs. 1,17,852/- on various parts used in the boilers and turbine of the aforesaid power plant. The lower authority disallowed the above Cenvat Credit of Rs. 1,17,852/- and imposed a penalty of Rs. 1,17,852/- under Section 11AC of the Act and Rs. 10,000/- under Rule 13 of the Cenvat Credit Rules, 2002 read with Rule 25 of the Central Excise Rules, 2002 for contravention of Rule 3 of the Cenvat Credit Rules, 2002 on the ground that the respondent had supplied a part of electricity to their sister concern located outside their factory premises through MPEB grid. They were only entitled to claim the credit on the inputs utilized in generation of the electricity used within their factory. Since the details of electricity wheeled out to their sister concern were not available, the whole of the Cenvat Credit availed by the respondent was disallowed.