The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the penalty as no demand was made in Show Cause Notice for alleged wrongful availment of CENVAT credit.
The appellant/assessee, M/s Nava Bharat Ventures Limited manufactures Ferro-Manganese and Silico-Manganese classifiable under Chapter 72 of Central Excise Tariff and pays Central Excise Duty. It has a captive power plant and part of the electricity generated is used in the manufacture of the final products and part is wheeled out to A.P. Transco, Subhash Kabini Power Corp. Ltd., Reliance Energy Trading Limited, A.P. Power Purchase Co-ordination Committee, etc. To the extent that electricity is captively used in the manufacture of final products, there is no dispute. The dispute is regarding the CENVAT Credit availed on the inputs and input services used in the production of electricity to the extent it is wheeled out.
The assessee reversed the proportionate amount of CENVAT Credit attributable to the inputs/input services to the electricity which is wheeled out. However, while calculating this proportionate amount of CENVAT credit, the credit on the input services mentioned in Rule 6(5) of CCR was not taken into account and no proportionate reversal was done on such input services. The show-cause notice demanded an amount equal to 8%/10% of the value of the electricity that was wheeled out under Rule 6(3A) of CCR. In the impugned order, the adjudicating authority...
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