S.S. GARG:

The present appeal is directed against the Order-in-Original dated 24.06.2014 passed by the Commissioner, Central Excise, Panchkula, whereby the learned Commissioner has confirmed the demand and recovery inadmissible Cenvat credit of Rs. 4,97,13,725/- under Rule 11 CCR read with Section 11A along with interest under Rule 14 read with Section 11AB and also imposed equal penalty under Rule 15(2) of CCR 2004 read with Section 11AC by invoking the extended period of limitation under proviso of Section 11A of Central Excise Act, 1944 for raising demand and recovery of inadmissible Cenvat credit.

2. Briefly the facts of the present case are that the appellant is engaged in the manufacturing of Sugar and Molasses falling under chapter sub heading 17019990 and 17031000 respectively of the Schedule to the CETA, 1985 and is availing the facilities/benefit of Cenvat credit of duty paid on inputs and Capital goods. During the course of audit of the appellant by AG (Haryana) from 15.04.2010 to 20.4.2010, it was found that the appellant has availed the Cenvat Credit amounting to Rs, 3,46,49,935/ during the period from April 2009 to March-2010 on the capital goods/inputs used exclusively in the manufacture of exempted goods (non-excisable) i.e. the Power Plant, installed and erected at site for generation of the electricity to be supplied for captive use and part of its supply to be made to UHBVPN from it. Further, the Department found that the appellant have actually brought the Power Plant in SKD condition to be erected and installed in their factory. In order to increase the existing capacity of Power generation from 8 MW to 24 MW and they have availed the Cenvat credit on the components and accessories of the said Power Plant to the tune of Rs. 4,97,13,725/-during the period from Jan-2009 to March-2010 as per annexure enclosed. It was found that out of 24 MW, 8MW of electricity generated from this plant was intended to be consumed captively in running of Sugar Mill and the balance 16 MW was to be given to Haryana Electricity Department. The appellant took 1/3rd of the total Cenvat Credit available on purchase invoices of these capital goods/inputs on assumption that they will use 1/3rd of electricity used in manufacture of dutiable final product.

2.1 Further the Department, entertained the view on the basis of the judgment in the case of M/s. Treveni Engineering & Industries Ltd Vs CCE [2000 (120) ELT 273 (SC)] and also relied upon the clarification issued by the Board vide its order No. 58/2002-CX. dt 15 Jan. 2002, wherein the Board took view and clarified that the Turnkey Projects like Steel plant, Cement plant and Power plant are non excisable goods. Further, the Department was of the view that as per the provisions of Rule 6(1) &6(4) of Cenvat Credit Rules, 2004 the appellant is not eligible to take Cenvat credit on capital goods & inputs which have been used in the manufacture of exempted goods i.e. Power Plant. On these allegations, the Department issued the show cause notice dated 28.01.2011 by invoking the extended period and demanding the ineligible Cenvat credit along with interests and penalties. The appellant filed detailed reply to the show cause notice controverting the allegation of the Department and asserted that they have rightly taken the Cenvat credit as per the Cenvat Credit Rules. After following the due process, the learned Commissioner vide the impugned order has confirmed the demand along with interest and penalties. Hence, the present appeal.

3. Heard both the parties and perused the material on record. Both the parties have filed the written submissions which have been taken on record.

4. Learned counsel appearing on behalf of the appellant submits that the impugned order is not sustainable in law and is liable to be set aside as the same has been passed without properly appreciating the facts and the law. He further submits that the entire dispute in the present case as framed by the Department itse