2008 (6) TMI 426 - AT - Central Excise

Summary

Issues Involved: Appeal against confirmation of demands and imposition of penalty on the applicant u/s Order-in-Original No. 25-31/Commr/M. II/07/475 for utilizing intermediate products in electricity generation.

Issue 1: Utilization of Intermediate Products for Electricity Generation

The applicant, a manufacturer of petroleum products, availed Modvat/Cenvat credit on inputs and set up a captive power plant for electricity generation used in manufacturing and refinery premises. Revenue alleged misuse of intermediate products for exempted goods, leading to demand reversal of Cenvat credit and penalties. Applicant argued electricity usage within refinery premises is covered by circular, citing similar cases and Supreme Court rulings favoring non-liability of duty on captively consumed electricity.

Issue 2: Duty Payment on Inputs for Electricity Usage

Applicant contended that electricity generated from intermediate products was used for dutiable and exempted products within the refinery, hence no Cenvat credit was availed. Tribunal noted lack of findings by adjudicating authority on this point and referenced a previous case where proceedings were dropped due to similar circumstances. Tribunal emphasized the need for consistency in Revenue's stance on such matters, allowing waiver of pre-deposit and stay on recovery pending appeal.

In conclusion, the Tribunal allowed the application for waiver of pre-deposit and stayed recovery of the demanded amount until appeal disposal, considering the significant duty demand involved. The case highlighted the importance of maintaining consistent interpretations of tax laws and precedents in similar situations to ensure fair treatment for taxpayers.