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2006 (2) TMI 325 - AT - Central Excise
Issues:
1. Availment of Cenvat credit on excess electricity procured by the appellant. 2. Interpretation of the show cause notice regarding duty payment on excess power. 3. Eligibility of the appellant to avail Cenvat credit based on Board's circular. 4. Correctness of the Commissioner's findings and the legality of the order passed. Analysis: 1. The appellant had obtained excess electricity from their 100% EOU unit and discharged duty amounting to Rs. 61,38,256. They availed Cenvat credit on this amount. The show cause notice alleged irregular availment of credit on raw materials for power generation. The appellant argued that they paid duty on excess power received, not on inputs, as per the Board's Circular permitting sale of power by EOUs on duty payment. The Counsel contended that the Commissioner misinterpreted the facts, leading to confusion. 2. The Counsel highlighted that electricity falls under Chapter Heading 2716.00 of the Excise Tariff. The Commissioner's order wrongly assumed the appellant availed credit on inputs for power generation, contrary to paying duty on excess electricity received. Referring to the Board's Circular No. 22/2003-Cus., the Counsel argued that duty paid on inputs for excess power generation is akin to duty paid on the electricity received, making the appellant eligible for Cenvat credit. 3. The Commissioner's findings were challenged, emphasizing that the duty paid by the appellant was on the excess power procured, not on inputs. The Tribunal noted that the show cause notice explicitly mentioned the duty payment on excess power as per the Board's Circular. Consequently, the Tribunal found the Commissioner's conclusion incorrect and ruled in favor of the appellant's eligibility to avail Cenvat credit based on the deeming provisions and relevant circulars. 4. After careful consideration of the facts and the show cause notice, the Tribunal determined that the appellant had paid duty on the excess electricity received, making them entitled to Cenvat credit as per the Board's circular. The Tribunal deemed the Commissioner's order legally flawed and granted full waiver of pre-deposit, with a stay on recovery by the Revenue pending appeal disposal. The Tribunal also accepted the request for early hearing due to the significant amount involved. This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision rendered by the Appellate Tribunal CESTAT, Bangalore.
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