The definition of input contained in rule 2(k) has been revised to include goods used for generation of electricity or steam for captive use. As a result CENVAT Credit on inputs used in generation of electricity for captive use can also be taken. But what would be the consequences where Electricity generated in excess is supplied elsewhere? Whether Rule 6 of CENVAT Credit Rules, 2004 be applied, as Rule 6 applies where manufacturer is engaged in manufacture of Dutiable as well as exempted goods. For clarification, Electricity is neither Excisable nor exempted goods, rather it comes under the category of non-excisable goods.Goods which are not excisable goods cannot be said to be exempt from duty or chargeable to nil rate of duty - view confirmed in CCE v. Kesar Enterprises Ltd. 2001(130) ELT 93 (CEGAT). Please suggest with reference to relevant provisions, notifications, circulars and judgements.
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Credit on inputs used in electricity generation
| Originally posted by : souvik | ||
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if the electricity is generated for captive use, then the manufacturer use the same for his manufacturing purpose. If he sells the excess, input credit wll be denied. Rule 6 wont be applicable. Reference can be made of Maruti Suzuki Ltd Vs CCEx . |
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Thanks Souvik for the early reply.
Your reply was very helpful for solving my query. The relevant part of the Supreme court case referred by you is produced below:
"Maruti Suzuki Ltd. v CCE (2009) 240 ELT 641 (SC)
The Apex Court inferred that the assessee was entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they were using the produced electricity within their factory (for captive consumption). They were not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which was sold at a price."
From above it is very clear that even if the manufacturer sells the excess Electricity, the whole credit will not be dinied. Manufacturer would not be entitled to CENVAT credit to the extent of the excess electricity sold at a price.
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