2005 (5) TMI 464 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty under Cenvat Credit Rules, 2002 for the manufacture of motor vehicles using naphtha to generate electricity supplied outside the factory to independent manufacturers.

Analysis:
The applicant sought waiver of pre-deposit of duty and penalty amounting to Rs. 67,71,876/- each, related to availing Cenvat credit for naphtha used in generating electricity for supply to vendors. The Revenue contended that as the electricity generated was supplied outside the factory to independent manufacturers, the applicant was not entitled to the Cenvat credit. The applicant relied on a previous Tribunal stay order in a different case to support their claim for total waiver of duty and penalty.

The Tribunal found that the electricity generated using the naphtha for which credit was taken was indeed supplied outside the factory to independent manufacturers. Unlike the previous case cited by the applicant, where electricity was supplied to the manufacturer's own units, in this instance, the electricity was supplied to independent manufacturers. Consequently, the Tribunal held that it was not a suitable case for a complete waiver of duty. The Tribunal directed the applicant to deposit Rs. 15 lakhs within eight weeks, and upon such deposit, the remaining duty and penalty pre-deposit were waived for the appeal hearing scheduled for a later date.

In conclusion, the Tribunal's decision emphasized the distinction between supplying electricity to one's own units versus supplying it to independent manufacturers in the context of availing Cenvat credit for fuel used in electricity generation. The judgment highlighted the need for a partial deposit to proceed with the appeal, considering the specific circumstances of the case.