2009 (5) TMI 639 - AT - Central Excise

Summary

Issues involved:
1. Application for stay of demand confirmed against the appellant by adjudicating authority.
2. Contention regarding the demand of duty on electricity exported to the grid.
3. Interpretation of the term "excisable goods" under the Central Excise Act.
4. Comparison of different judicial decisions on similar matters.
5. Consideration of whether electricity is excluded from the definition of excisable goods.
6. Granting of stay of the impugned order without pre-deposit under Section 35F.

Analysis:
1. The appellant filed an application for a stay of the demand confirmed against them by the adjudicating authority, amounting to Rs. 98,51,997/- along with an equal penalty. The demand was based on the requirement to pay 10% of the sales price of electricity exported to the grid of the State Electricity Board. The appellant had availed credit on common inputs and input services during a specific period.

2. The appellant argued that electricity does not fall under the definition of excisable goods as per Section 2D of the Central Excise Act. They contended that previous tribunal orders were not considered, and the demand was unjustly imposed based on availing Cenvat credit. The appellant cited various court decisions to support their argument, emphasizing that electricity should not be subject to excise duty.

3. The respondent, however, relied on a tribunal decision stating that electricity is listed in the First Schedule of the Act, implying it is not excluded from the definition of excisable goods. Despite the absence of a specified duty rate for electricity, the respondent argued that it should still be considered excisable. The tribunal noted the consistent view from previous orders that electricity is not excisable goods, leading to the stay of duty demands in such cases.

4. Considering the definition of excisable goods and various legal precedents cited by both parties, the tribunal found a prima facie case for granting a stay of the impugned order. They highlighted that liability to pay tax arises only when statutorily imposed and that electricity, despite being listed in the Act, is not subjected to excise duty. The tribunal deemed the appellant's case arguable and stayed the execution of the order without requiring a pre-deposit under Section 35F.

5. By waiving the pre-deposit requirement, the tribunal ensured no prejudice to the revenue's interests. The application for stay was allowed, and the impugned order was stayed, including the pre-deposit of duty, interest, and penalty until the appeal's final disposal. The tribunal's decision was based on a careful analysis of the definition of excisable goods and relevant legal principles, ultimately granting relief to the appellant pending the appeal's outcome.