Page 150 - GSTL_23rd April 2020_Vol 35_Part 4

476 GST LAW TIMES [ Vol. 35
Commissioner of Central Excise, Nagpur v. Indorama Textiles Ltd., 2010 (260)
E.L.T. 382 (Bom H.C.)
Haldia Petrochemicals Ltd v. CCE, Haldia, 2006 (197) E.L.T. 97 (Tri. - Delhi)
Sanghi Industries Limited v. CCE, Rajkot, 2006 (206) E.L.T. 575 (Tri. - Delhi)
Sanghi Industries Limited v. CCE, Rajkot, 2014 (302) E.L.T. 564 (Tri. -
Ahmd.)
On perusal of the above cited Bombay High Court Judgment in the case of Com-
missioner of Central Excise, Nagpur v. Indorama Textiles Ltd., which was subse-
quently upheld by the Supreme Court vide its Judgment [2010 (260) E.L.T. A83
(S.C.)], it is established that electricity can be generated on the Job work basis. It
is further inferred that when electricity can be generated on job work basis, it is
bound to happen that any inputs sent to the premises for the generation of elec-
tricity would not be sent back in the same original form. Instead, the same is des-
tined to be consumed for the generation of electricity, which was actually the
facts of the cited case law discussed herein above, wherein the Respondent i.e.
Indorama Textiles Ltd. was vying to claim the input tax credit in respect of the
furnace oil, which was getting consumed in the premises of their job worker. The
Bombay High Court, in this case, decided in the favour of the Respondent, hold-
ing that the Respondent was justified in claiming input credit in respect of the
furnace oil, being used at the job worker’s premises for the generation of electric-
ity, which was the intermediate goods, being received by the Respondent, in that
case the principal.
By applying the above case law in the instant case, it is opined that coal,
despite being consumed in the process of the generation of electricity, thereby
becoming irretrievable, will not preclude the proposed arrangement from being
the job work transaction, as understood by the Appellant. Thus, we rescind our
earlier observation, wherein it was opined that the proposed arrangement did
not fulfil the conditions prescribed under Section 143 of the CGST Act in relation
to bringing back the same inputs by the principal attributable to the reason that
the coal, proposed to be sent by JSL, the principal, to JEL, the Job worker, would
stand consumed and therefore, would be irretrievable in the same form after the
conclusion of the proposed job work.
66. As regards our observation encapsulated in the impugned order
dated 2-7-2018, wherein it was held that since the Appellant i.e. JEL would be
adding considerable amount of other inputs in terms of volume and cost in the
form of water and air besides the steam coal to be supplied by JSL, the activities
carried out by the Appellant in the proposed arrangement would not be quali-
fied for job work in accordance with the Hon’ble Supreme Court Judgment in the
case of Prestige Engineering (India) Ltd. v. Collector of C. Ex. Meerut, [1994 (73)
E.L.T. 497 (S.C.)], wherein it was observed by the Apex Court that for any activi-
ty or transaction to be construed as the job work, the job worker is allowed to
add only minor inputs or raw materials to the inputs supplied the principal.
However, in the subject arrangement, the proposed job worker i.e.
JEL/Appellant would be adding considerable and sizeable amount of inputs in
terms of volume and cost in the form of air and water to the input supplied by
the proposed principal i.e. JSL in this case, and the activities carried out by the
Appellant would not qualify for the Job work in terms of the above observation
of the Apex Court.
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