2006 (5) TMI 398 - AT - Central Excise

Summary

Issues:
1. Denial of credit on furnace oil used in the manufacture of electricity.
2. Interpretation of Apex Court judgment in the case of Vikram Cement v. CCE Indore regarding the utilization of inputs for generation of electricity.

Analysis:
1. The issue in this case revolves around the denial of credit on furnace oil utilized in the manufacture of electricity within the factory premises. The appellants were required to pre-deposit a significant sum along with a penalty. The revenue contended that since the job worker produced electricity for the appellants within the factory, the credit on furnace oil was denied. However, the Tribunal found that the mere fact that the job worker was involved in electricity production does not justify denying the credit on the furnace oil. The Tribunal noted that the Supreme Court judgment in the case of Vikram Cement v. CCE Indore did not specifically address the scenario of a job worker manufacturing electricity, but rather focused on the consumption of electricity within the factory and the grant of Cenvat/Modvat credit for inputs used in electricity or steam generation for manufacturing final products within the factory.

2. The learned counsel for the appellants referred to the Apex Court judgment in Vikram Cement v. CCE Indore to support their case, highlighting that the issue had been settled by the said judgment. On the other hand, the Departmental Representative argued that the cited judgment did not pertain to a situation where a job worker was involved in electricity production. The Tribunal, after careful consideration, held that the distinction raised by the Departmental Representative was not sufficient to differentiate the present case from the Supreme Court judgment. The Tribunal opined that the mere involvement of a job worker in electricity production should not be a ground for denying the benefit of credit on inputs like furnace oil. Consequently, the Tribunal allowed the stay application unconditionally, granting waiver and staying the recovery of the amount in question until the appeal was disposed of. Given the substantial revenue involved, the Tribunal directed an expedited hearing of the appeal.

In conclusion, the Tribunal's decision in this case emphasized the importance of not unduly restricting the availability of credit on inputs used in manufacturing processes, even when job workers are involved in certain aspects of production. The judgment underscored the need for a holistic interpretation of legal precedents to ensure fair treatment and the protection of the rights of the appellants in tax matters.