LUCAS TVS LIMITED Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant is a manufacturer of automobile component. They installed a DG set alongwith control panel in their unit and have taken capital goods Cenvat credit amounting to Rs. 3,37,015/ - in respect of the same. While the bulk of the electricity produced is used in the factory, a part of the electricity is sold outside to M/s. India Nippon Electricals Ltd. The Department was of the view that since the electricity generated by the DG set is not being exclusively used in the factory of the appellant for manufacture of finished products, and a part of the electricity generated is being sold outside, they are not eligible for Cenvat credit. On this ground, after issue of show cause notice, the Asst. Commissioner vide Order -in -Original dated 86/CE/05 dated 7.12.05 confirmed the Cenvat Credit demand of Rs. 3,37,015/ - alongwith interest and imposed penalty of equal amount under Section 11AC of Central Excise Act read with Rule 13 of Cenvat Credit Rules 2002. On appeal against this order, the CCE (Appeals) vide the impugned order dated 15.11.06 has upheld A.C.'s order, against which the present appeal has been filed.

(2.) HEARD both the sides.

(3.) SHRI . Sansar Chand, the learned Sr. DR defended the impugned order, pleading that the Tribunal's judgment in the case of CCE v. Jindal Steel & Power Limited reported in relied upon by the appellant is not applicable to the facts of the present case, that from the provisions of Rule 57AD(3) of Central Excise Rules/Rule 6(4) of Cenvat Credit Rule 2001 -02, it is clear that capital goods Cenvat Credit is admissible in respect of only those capital goods which are exclusively used in production of dutiable goods, that is in this case, the cost of generating electricity is being shared by M/s. India Nippon Electricals Ltd. by an agreement of the appellant with them, that the Tribunal judgment in the case of Nizam Deccan Sugars Ltd. (supra) relied upon by the appellant is not applicable in the facts of the present case and that the Hon'ble Supreme Court in the case of CCE v. Solaris Chemtech Ltd. reported in has held that when Low Sulphur Heavy Stock (LSHS) and furnace oil is used to generate electricity which is captively consumed for manufacture of final product as well as supplied to residential colony of factory's workers' families, schools etc. the Cenvat Credit in respect of LSHS and furnace oil used for generation of electricity with in turn, was supplied to residential colony, schools etc. would not be available. He also pleaded that the fact that the appellant had an agreement with M/s. India Nippon Electricals Ltd. for supply of electricity for which the cost was being shared by them had never been disclosed to the Department and therefore, longer limitation period has been rightly invoked.