CENVAT Credit- supply of electricity to sister concern - merely a book adjustment is also a form of payment- assessee liable to reverse pro-rata CENVAT credit of inputs used in generation of electricity
FACTS:
The assessee manufacturer used Naphtha fuel for generation of electricity. A part of electricity so generated was captively consumed in manufacture of final product and remaining was supplied to its sister concern. Department denied pro-rata credit for electricity supplied to sister concern. Tribunal decided in favour of the assessee. On Revenue's appeal, Supreme Court remanded the matter back to revenue to quantify denial of credit, considering electricity was wheeled out / cleared for a price to sister concern. Assessee argued that reversal was not warranted as it did not charge any price to sister concern and department erroneously proceeded only on the basis of book adjustment entries and interest could not be demanded as there was sufficient balance in the CENVAT credit account which remained unutilized to the extent of demand raised by the assessee.
HELD:
Relying upon the decision of Collector of CE VS. Modem Food Industries (India) Ltd. 1988 taxmann.com 190 (CEGAT - New Delhi) (S8), Tribunal held that the transfer of amount by the sister unit by book adjustment would be treated as amount charged to the other unit. It was also observed that the adjudicating authority calculated the demand based on Chartered Engineer's Certificate and therefore Tribunal upheld the adjudication order to the extent of recovery of CENVAT credit
As regards non-charging of interest, it was held tha: assessee had wrongly availed CENVAT credit but die not utilise the credit against any liability. However, "- view of the fact that there are judgments in favour s: both assessee as well as revenue in this regard, matter was remanded back to the adjudicating autho " _ to analyse whether assessee had factually utilised CENVAT credit to decide the case afresh in the light such decisions.
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