Dear Friends,
I have a small query in relation to excise duty on power generation.
A company has a cement manufacturing plant. It has also established a 25MW power generation plant for captive consumption of power to be used in cement manufacture. However, current requirement of power for cement manufacture is only 15MW. So the company has set up a grid and is selling the some power to the government. Further, the power generated is also used in power generation itself.
In case of services received for the power plant, the company is taking proportionate credit for the power consumed in cement plant and for power generation. And in cases of inputs and capital goods purchased for use in power division, the company is taking full credit of CENVAT.
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.
2) The company is taking full credit on the power consumed for power generation. Is this correct?
3) The company is taking the full CENVAT credit on the inputs and caital goods purchased. Is this correct?
Please support the answer with reference to the relevent section and case laws.
CAclubindia
