2019 (11) TMI 1203 - HC - Central Excise

Maintainability of appeal - monetary amount involved in the appeal - sale or not - electricity so generated and cleared to the grid outside the factory - HELD THAT - Vide instructions dated 22.8.2019, the Central Board of Indirect Taxes and Customs (CBIC) has prescribed the monetary limits for filing and prosecuting appeals in this Court at ₹ 1 crore and above - It is further stated therein that vide email dated 23.10.2019,counsel for the appellant has received instructions for withdrawal of the present appeal since the duty amount involved in this matter is ₹ 53,09,892/- and thus below the monetary limit prescribed by CBIC. In the end prayer has been made to grant permission to appellant to withdraw the appeal. Appeal dismissed as withdrawn.

Issues:
1. Appeal against rejection of demand for recovery of CENVAT Credit availed on cenvatable inputs.
2. Interpretation of whether electricity generated and cleared outside the factory constitutes a sale under the Central Excise Act.
3. Determination of whether electricity generated and sold outside the factory premises can be considered captively used for manufacturing final products and if CENVAT Credit on inputs used in power generation is admissible.
4. Review of the correctness of the final order passed by CESTAT and the provisions considered in the decision-making process.
5. Assessment of the sustainability of the judgment by the CESTAT Court.
6. Application for withdrawal of appeal based on monetary limits set by CBIC.

Analysis:
1. The High Court is considering an appeal under Section 35 G of the Central Excise Act, 1944, challenging the rejection of the demand for recovery of CENVAT Credit availed on cenvatable inputs by the appellant. The primary issue revolves around the interpretation and application of relevant legal provisions governing CENVAT Credit in this context.

2. The first substantial question of law raised in the appeal pertains to whether electricity generated and cleared outside the factory should be treated as a transaction of 'sale' as defined in the Central Excise Act. The dispute arises from conflicting interpretations between the adjudicating authority's order and the final order issued by CESTAT, Chandigarh. The determination of this issue is crucial for establishing the tax liability and implications concerning the electricity transactions in question.

3. Another significant issue raised in the appeal concerns the treatment of electricity generated and sold outside the factory premises. The query is whether such electricity can be deemed captively used for manufacturing final products, thereby making the CENVAT Credit on inputs utilized in power generation admissible. The appellant contests the decision made by CESTAT, emphasizing the applicability of specific rules under the Central Excise Act and CENVAT Credit Rules to support their claim.

4. The third substantial question of law challenges the correctness of the final order passed by CESTAT, Chandigarh, which dismissed the department's appeal. The appellant questions whether the provisions outlined in various Central Excise Rules and CENVAT Credit Rules were adequately considered in the decision-making process. This issue delves into the procedural and substantive aspects of the CESTAT's judgment and its compliance with the relevant legal framework.

5. Additionally, the appeal raises concerns regarding the sustainability of the judgment delivered by the Hon'ble CESTAT Court. The review aims to assess the legal validity and soundness of the CESTAT's decision in light of the applicable laws and precedents. This issue focuses on ensuring that the judicial pronouncement aligns with the established legal principles and statutory provisions governing excise duties and CENVAT Credit.

6. Lastly, an application for withdrawal of the appeal has been submitted based on the monetary limits set by the Central Board of Indirect Taxes and Customs (CBIC). The appellant seeks permission to withdraw the appeal due to the duty amount involved falling below the prescribed threshold. The High Court grants the application, allowing the appellant to withdraw the appeal in compliance with the CBIC's monetary guidelines.

In conclusion, the judgment by the High Court of Punjab & Haryana involves a comprehensive analysis of various legal issues surrounding the rejection of CENVAT Credit, the treatment of electricity transactions, the correctness of the CESTAT's final order, and the application of monetary limits for appeal withdrawal. The detailed examination of these issues underscores the complexity of excise duty matters and the critical importance of adhering to statutory provisions and judicial precedents in resolving such disputes.

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