Excise duty on power generation

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Gourav Choudhary (Querist)
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21 September 2011 Dear Experts,
I have a small query in relation to excise duty.
A company has a cement manufacturing plant. It has also established a 25MW power generation plant for captive consumption of power in cement manufacture. However, current requirement of power for cement manufacture is only 15MW. So the company has set up a grid and is selling the balance 10MW power to government.

Now whether the excise duty will be applicable on this?

Further, the company has not shown the power division seperately in books. The company receives many services and pays the service tax. Whether the full service tax credit will be available for set off? If not, in what proportion, the credit will be disallowed.

U S Sharma

U S Sharma (Expert)
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22 September 2011 as power is though classified under ceta, but not charged with excise, so its better to make separate accounts for power units and disallow the input service tax paid on power plant ( for your own manufacture and for sale both) otherwise the issue of captive consumption and dutiability on captive goods will make it litigated.

Gourav Choudhary

Gourav Choudhary (Querist)
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23 September 2011 Thanks Mr. Sharma. But the company is taking full credit of service tax paid for services received for power division and services which are common to both cement and power.
On what context i may raise question on the treatment followed by company?

PAWAN KUMAR

PAWAN KUMAR (Expert)
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10 October 2011 you may ask your client to pay 5% of the sale value of power distributed out of their plant in respect of non-maintenance of separate inventory for input services.

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