Excise duty on power generation

Electrical energy bears nil rate of duty. Hence, cenvat credit on inputs, input services and caital goods relating to this activty may be inadmissible. But if capital goods are partly used for duty paying acivity, then credit is available.

Dear Sir,

I agree with Iyer sir that Electricity is Nil rated but not exempted. But since NIL rate is also a rate of duty Input credit of Inputs, Capital Goods & Input Services will be admissible.

I have following queries in this respect:

1) Whether excise duty is payable on power generation or not? Here the company is using the power for commercial purpose as well as for captive consumption.

ANS: No Excise duty will not payable

2) The company is taking full credit on the power consumed for power generation. Is this correct?

ANS: No. Since company is selling electricity to outside agency i.e outside factory. Only proportinate credit will be admissible on Inputs & Input Service. Full credit will be available for CG. Refer CASE LAW OF MARUTI SUZUKI (2009) (SC)

3) The company is taking the full CENVAT credit on the inputs and caital goods purchased. Is this correct?

ANS: Covered in above

@ Nitin thanks for sharing this however in the said Judgment i couldn't find that cenvat credit was allowed on 100% of capital goods. the Judgment indicates it should be on proportionate basis. Please calrify. Its Urgent! Thanks for your time.

Dear Sir

As per SC decision it has disallowed proportinate credit of Input & Input Services only but not on capital goods. Therefore it is to be interpreted as full credit will be allowed on capital goods.