Ajit Bharihoke, President - The appellant M/s Hindalco Industries Ltd., Renukoot is engaged in the manufacture of aluminium and product thereof which are subject to excise duty. Undisputedly, the appellant has a power plant namely Renusagar power plant located at some distance from the main unit of the appellant. The entire power production from the said power plant is supplied to the appellant company. The appellant during the period August 2009 to February 2010 had availed cenvat credit of service tax of Rs.35 lakhs on the premium paid to M/s New India Assurance Company Ltd. on various insurance policies covering up the power plant such as, mega risk insurance policy and terrorism insurance policy. The appellant had utilized the aforesaid credit for the payment of duty on clearances of final product.

2. The Department was of the view that since Renusagar Power Plant was located at different premises, it is a separate entity and it could not be termed captive power plant and therefore, the appellant had wrongly availed cenvat credit in respect of the services to be paid on the insurance policies pertaining to the power plant. Accordingly, show cause notice was served on the appellant calling upon them to show cause as to why the cenvat credit availed by him should not be disallowed and recovery with interest and also penalty should not be imposed.

3. The appellant contested the show cause notice and claimed that Renusagar Power Plant was part of M/s Hindalco Industries Ltd. and it being a captive power is being used for the production of final product, and, therefore, the appellant had rightly availed the cenvat credit in respect of service tax paid on the insurance policies.

4. The adjudicating authority was not convinced with the submission and therefore, cenvat credit availed by the appellant was disallowed and cenvat credit demand to the tune of Rs.35 lakhs was confirmed with interest and penalty of Rs.2000/- was imposed.

5. Feeling aggrieved of the order in original, the appellant preferred appeal before Commissioner (Appeals) and his appeal was dismissed on 20.9.2011.

6. Against the aforesaid dismissal of the appeal by the Commissioner (Appeals), the appellant has preferred this appeal. He has also moved an application under Section 35F of the Central Excise Act, 1944 for waiver of the condition of pre-deposit of duty, interest and penalty.

7. The case was fixed today for hearing of stay application. After some arguments, we feel that there is no dispute about facts and the issue involved in this case is purely a legal issue concerning definition of 'captive plant'. We are therefore, of the view that appeal itself can be disposed of at this stage. Accordingly, with the consent of the parties, after waiving the condition of pre-deposit, we have heard the appeal for final disposal.

8. Learned counsel for the appellant Shri B.L. Narasimhan, Advocate has submitted that undisputedly, Renusagar Power Plant belongs to the appellant and its captive production of power is used by the appellant company. As such, the service tax on insurance policies concerning power plant falls within the category of eligible input service. Accordingly, the appellant has rightly availed the cenvat credit. Thus, the learned Counsel has urged that the appeal be accepted and the impugned order be set aside. In support of this contention, he has relied upon the judgment of the Supreme Court in the matter of State of U.P. v. Renusagar Power Co. AIR 1988 SC 1737.

9. Shri I. Baig, learned A.R. for Revenue refuting the contention of the learned Counsel for the appellant has submitted that the Commissioner (Appeals) was right in affirming the impugned order. He has drawn our attention to para 7 of the order in appeal wherein the Commissioner (Appeals) has given reasoning for disallowing the cenvat credit to the appellant. For the sake of convenience, the aforesaid paragraph of the impugned order is reproduced:

"7. To examine the 1st issue, first of all, I sha