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2011 (9) TMI 890 - HC - Central Excise
Issues:
Applicability of MODVAT Scheme to electricity generation for export. Analysis: The primary issue in this case revolves around the applicability of the MODVAT Scheme to electricity generation for export. The dispute arises from the interpretation of provisions of Rule 57Q or 57R(2) of the Central Excise Rules, 1944. The Commissioner (Appeals) initially ruled in favor of the assessee, allowing MODVAT credit for electricity generation. However, the Revenue challenged this decision, arguing that electricity, being a non-excisable product, is not eligible for MODVAT credit under the mentioned rules. The Appellate Commissioner of Central Excise also disallowed the credit availed by the assessee, leading to an appeal before the Commissioner of Central Excise (Appeals), who reversed the decision, prompting the Revenue to appeal to the Customs, Central Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT, upon reviewing the case, upheld the decision of the Commissioner (Appeals), emphasizing that the decision was based on binding case law and thorough analysis. However, the CESTAT did not specifically address the crucial question raised by the Revenue regarding the eligibility of MODVAT credit for electricity exported to the Tamil Nadu Electricity Board. The High Court, acknowledging the importance of this unresolved issue, remitted the matter back to the CESTAT for a fresh consideration. The High Court directed the CESTAT to independently evaluate the grounds raised in the appeal and make a decision in accordance with the law. In conclusion, the High Court disposed of the Civil Miscellaneous Appeal by remitting the case to the CESTAT for a reevaluation of the critical issue concerning the eligibility of MODVAT credit for electricity generation and export. The High Court refrained from expressing any opinion on the merits of the case but emphasized the need for a thorough examination of the grounds raised by both parties. No costs were awarded in the disposition of the appeal.
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