2019 (11) TMI 14 - HC - Central Excise

Permission for withdrawal of appeal - monetary amount involved in the appeal - CENVAT Credit - HELD THAT - It is averred in the application that Central Board of Indirect Taxes and Customs has issued instruction dated 22.8.2019 and revised the monetary limits for filing appeal before this Court to ₹ 1.00 Crore and the said instructions are applicable to pending appeal - It is further averred that office of Commissioner of Central Goods and Service Tax, Rohtak has sent instruction to the effect that duty involved in the appeal being ₹ 66, 30, 293/- is below prescribed threshold limit and as such prayer for withdrawal of the appeal. Application dismissed as withdrawn.

Summary

Issues:
1. Whether Cenvat Credit needs to be proportionately reversed when inputs are not used in manufacturing specified final products within the factory?
2. Legality of CESTAT Final Order dated 13.10.2017 under Cenvat Credit Rules, 2004.
3. Any other relief deemed fit by the Hon'ble High Court.

Analysis:

Issue 1:
The appeal under Section 35G of the Central Excise Act, 1944 challenges the CESTAT order dismissing the Revenue's appeal. The core issue revolves around whether Cenvat Credit availed for inputs must be reversed proportionately under rule 14 of the Cenvat Credit Rules 2004 when the inputs are not used in manufacturing specified final products within the factory. The case involves electricity generated from inputs, with the Cenvat Credit, being wheeled out to the State Electricity Board grid outside the factory. The appellant contends that Cenvat Credit should only apply to fuel used in power generation for manufacturing, not for exported electricity.

Issue 2:
The facts reveal that the respondent company, engaged in stainless steel product manufacturing, procures furnace oil for its captive power plant, exporting a portion of the generated power to the State Electricity Board grid. The dispute arises from the admissibility of Cenvat Credit to the respondent for the exported electricity. The Adjudicating Authority confirmed duty demands and penalties for various periods, leading to the Revenue's unsuccessful appeal before CESTAT, culminating in the present appeal before the High Court.

Issue 3:
A subsequent application seeks permission to withdraw the appeal based on revised monetary limits for filing appeals, citing a threshold limit below the duty involved in the appeal. The Central Board of Indirect Taxes and Customs' instructions and the Commissioner's directive support the withdrawal of the appeal. Consequently, the High Court allows the application, leading to the dismissal of the appeal bearing CEA No.69/2019.

In conclusion, the judgment delves into the intricacies of Cenvat Credit rules concerning the usage of inputs in manufacturing processes and the implications of exporting generated electricity on such credits. The legal battle surrounding duty demands and penalties highlights the importance of adherence to statutory provisions and the subsequent administrative decisions leading to the appeal process. Ultimately, the revised monetary limits for appeals play a crucial role in the withdrawal and dismissal of the appeal before the High Court.