Facts of the Case

This dispute predates GST and concerns the Central Excise regime, even though the respondent department is now titled 'Commissioner of GST & Central Excise' following administrative restructuring. M/s. Dhanalakshmi Srinivasan Sugars Private Limited challenged a show-cause notice dated 08.12.2010 (C.No.V/Ch.17/15/62/2010-Cx.Adj.) asking it to show cause why CENVAT credit availed on capital goods used in its co-generation plant should not be reversed, along with interest and penalty. This is a purely pre-GST Central Excise/CENVAT credit issue relating to financial years long before GST's introduction in July 2017.

Issues Involved

  1. Whether CENVAT credit on capital goods used in a co-generation/captive power plant was validly available to the petitioner under the applicable pre-GST Central Excise rules.
  2. Whether an identical issue already decided in favour of a similarly placed assessee (EID Parry) should be applied to the petitioner's case.

Petitioner's Arguments

  • The very same issue had been decided by the Commissioner of GST and Central Excise in Order-in-Original No. 08/COMMR/CE/2023 dated 31.03.2023, in the case of M/s. EID Parry (India) Limited, Pugalur Sugar Factory, holding that CENVAT credit was available for machinery and other items used in a captive power plant.
  • The same yardstick ought to be applied to the petitioner's case, since the facts were parallel.

Respondent's Arguments

  • Since this was only a show-cause notice, the petitioner's representation citing the EID Parry order could be made directly before the concerned officer rather than through a writ petition.

Court Order / Findings

  • The Court accepted the submissions of both sides and disposed of the writ petition with a direction that the petitioner's official appear before the Commissioner of GST and Central Excise on 12.07.2023.
  • The first respondent was directed to follow the order dated 31.03.2023 passed in the EID Parry matter (Order-in-Original No. 08/COMMR/CE/2023) and allow CENVAT credit for the machinery used in the petitioner's co-generation/captive power plant.
  • The order was to be passed within two weeks of the petitioner's appearance.

Important Clarification

This is a CENVAT credit dispute under the erstwhile Central Excise law, decided by directing the authority (now administratively titled 'Commissioner of GST and Central Excise') to apply a precedent from another sugar mill's case. It has no bearing on Input Tax Credit or any provision of the GST Acts — readers should not treat this as GST case law despite the officer's current title.

Sections Involved

  • CENVAT Credit Rules (framework under the erstwhile Central Excise regime) — not a GST provision.
  • Central Excise Act, 1944 — governing statute for the show-cause notice.

Decision – In Favour of

Decided in favour of the petitioner in substance; the writ petition was disposed of with a direction that CENVAT credit for the co-generation/captive power plant machinery be allowed, following the precedent set in the EID Parry order.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case No.: W.P.(MD) No. 28508 of 2022 (with W.M.P.(MD) Nos. 22514 and 22516 of 2022)
  • Coram: Hon'ble Ms. Justice P.T. Asha
  • Date of Order: 28 June 2023

Link to Download the Order

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