2026-VIL-99-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Reversal of CENVAT credit on electricity sold to State Electricity Board, Penalty under CENVAT Credit Rules - Appellant availed CENVAT credit on inputs and input services used in its Captive Power Plant for generating power, which was partly consumed in the factory, partly transferred to its sister concerns, and partly sold to the State Electricity Board - Department objected to the appellant's CENVAT credit claim on the portion of electricity wheeled out to the sister concerns and sold to the State Electricity Board - Whether the appellant was justified in availing CENVAT credit on inputs and input services used for generating electricity that was sold to the State Electricity Board – HELD - As evidenced by the details provided in the replies to the SCNs and the corresponding ER-1 returns, the appellant had reversed the CENVAT credit attributable to the electricity sold to the State Electricity Board. Once the CENVAT credit availed on inputs and input services attributable to electricity sold to the State Electricity Board is reversed, it would tantamount to not availing the credit at all. The demand raised in the impugned order with respect to the inputs and input services attributable to the electricity sold to the State Electricity Board is set aside - Since the appellant had reversed the CENVAT credit attributable to the electricity sold to the State Electricity Board, it amounted to not availing the credit at all, and therefore, the penalty could not be imposed – The impugned order is set aside and the appeal is allowed
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