Power Project and Power Plant – Distinction

In Union of India v. Indian Charge Chrome, (1999) 7 SCC 314 it was held as under:
“The industrial resolution made a clear distinction between ‘power project’ which is set up for generation and distribution of electricity and a ‘power plant’ which is set up to generate power for their own requirement or captive consumption of the industrial unit. The captive ‘power plant’ cannot be considered as ‘power project’ and the two cannot be equated with each other. A power project is set up by the Government to cater to the needs of the public by generating and distributing the electricity generally while a captive power plant is set up by an industrial unit to feed power to its own plant or unit for manufacturing of goods other than power. Though it is true that an industrial unit installing a power plant to the extent of the electricity generated by it shares the burden of the Government power projects generating electricity for distribution and to that extent their purpose may be alike, the fact remains that a power generating unit in the public sector has its own limitations and shortcomings as well. An industrial unit depending on public power generation source shall have to bear with power cuts, failures and other regulations and restrictions imposed in the public interest. By installing its own power plant, the industrial unit is free to generate and avail uninterrupted power supply or the quantum and flow of electricity suited to its own requirements and thereby it can maximize its production and consequently its profits. It is therefore clear that power plant projects engaged in generation and distribution of power as its end product – the sense in which the expression has been used in the industrial policy resolution constitute a class by themselves distinct from the power plants established by industrial units generating electricity for captive consumption and not for distribution. The two classes are well defined.” Venkataraya Power Ltd. v. Commissioner of Customs, (2015) 16 SCC 295.


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Filed under Commercial Law, Power Plant

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