2013 (3) TMI 618 - HC - Central Excise

Summary

Issues involved:
The judgment involves a stay application against a CESTAT decision, interpretation of Cenvat credit rules, conflict between Supreme Court decisions, and grant of partial stay on certain conditions.

Stay application against CESTAT decision:
The applicant-assessee sought a stay against the CESTAT judgment in Tax Appeal No. 793 of 2012, which was admitted separately by the High Court. The question at hand had previously been ruled in favor of the assessee by the Supreme Court in a specific case. However, a subsequent decision by the Supreme Court introduced a different perspective on the issue, leading to a conflict between the two rulings.

Interpretation of Cenvat credit rules:
The Supreme Court's analysis of the Cenvat credit rules highlighted the principle that credit for duty paid on inputs used in the manufacture of exempted final products is not allowable. The Court differentiated between fuel and non-fuel inputs, emphasizing the need for separate accounting of inputs in certain situations. The judgment underscored that the legal effect of the rules must be applied comprehensively to all inputs, with exceptions and conditions specified for different types of inputs.

Conflict between Supreme Court decisions:
A later Supreme Court order acknowledged a conflict between two previous decisions regarding the entitlement to claim Cenvat credit on duty paid inputs used in the manufacture of exempt products. The Court recognized the need to refer the issue to a larger Bench to resolve the conflict between the two rulings, emphasizing the general applicability of the legal principles involved.

Grant of partial stay on conditions:
Considering the conflicting interpretations and the pending resolution at a larger Bench, the High Court granted a partial stay on the CESTAT judgment. The stay was contingent upon the applicant depositing 50% of the duty demand by a specified date, outlining a specific condition for the stay to take effect.