Page 138 - GSTL_23rd April 2020_Vol 35_Part 4

464 GST LAW TIMES [ Vol. 35
islations applicable to the State of Karnataka, where the assessee referred to in
the aforesaid paragraph is located. Even under the GST legislation, JSL has been
availing credit of GST paid on coal. A sample copy of the bill of entry for import
of coal by JSL, on which credit has been availed, is enclosed herewith.
17. Furthermore, with reference to the provisions under the erstwhile
Cenvat Credit Rules, 2004, the Hob’ble Supreme Court in the case of Maruti Su-
zuki Ltd. v. CCE [2009 (240) E.L.T. 641 (S.C.)] held that when power generation is
a captive arrangement and the requirement for carrying out the manufacturing
activity, the power generation forms part of the manufacturing activity and ‘in-
puts’ used in the power generation would be treated as inputs used in the manu-
facture of final product. The relevant extract of the said judgment is reproduced
as follows :
The question which still remains to be answered is : whether an assessee
would be entitled to claim Cenvat credit in cases where it sells electricity
outside the factory to the joint ventures, vendors or gives it to the grid for
distribution? In the case of Collector of Central Excise v. Rajasthan State Chem-
ical Works reported in 1991 (55) E.L.T. 444 (S.C.) the test laid down by this
Court is whether the process and the use are integrally connected. As stated
above, electricity generation is more of a process having its own economics.
Applying the said test, we hold that when the electricity generation is a captive
arrangement and the requirement is for carrying out the manufacturing activity,
the electricity generation also forms part of the manufacturing activity and the
“input” used in that electricity generation is an “input used in the manufacture”
of final product......
(Emphasis Supplied)
18. Basis the above rulings, the Appellant humbly reiterates that coal
has been construed as an eligible input used for the manufacture of power which
in turn is used for manufacturing/supply of taxable product and accordingly
credit for the same has been allowed. These facts are akin to the Appellant’s mat-
ter, who generates power from a captive power plant of the Principal (i.e. JSL).
Therefore, given the facts of the present scenario, coal should be continued to be
treated as an input in the hands of JSL.
Inputs can be brought back by the principal with the help of a third party :
19. The Appellant reiterates that transaction undertaken by it fulfills ail
the conditions mentioned under Section 143 of the CGST Act to qualify as a Job
Work transaction. The Appellant submits that inputs provided by JSL, are pro-
posed to be sent back to the Principal in the form of power within the stipulated
time and in accordance with the aforesaid section. Further, the Appellant humbly
submits that the said section does not bar the involvement of a third party for
transporting the goods from the premises of the Job Worker to the Principal. The
Ld. Appellate Authority has erred in its order under paragraph 48 to hold that
the job work arrangement requires only two persons. The Appellant humbly
submits that movement of inputs from the Principal to the Job Worker and back
to the Principal, subsequent to completion of the Job Work would require a me-
dium or a carrier. As an illustrative example, inputs which are brought back to
the Principal’s premises and are tangible in nature could be transported through
roadways/railways etc. In such a ease, the rail authorities would be a regulator
for allocation of rakes/carriages. A fee would be charged for transportation of
inputs, loading, unloading etc. In light of the said example, it would be absurd to
conclude that since the railway authority is a regulator in said example, a Job
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