2006 (2) TMI 13 - AT - Central Excise

Central Excise Modvat credit Inputs used for purification of water for generation of electricity which is cleared outside the factory - Limitation Demand

Summary

Issues:
1. Time bar for setting aside demands.
2. Eligibility of modvat credit for excess electricity diverted to housing colony.

Analysis:
1. The appeal before the Appellate Tribunal arose from Order-in-Appeal No. 95/05-CE confirming demands issued by a show cause notice for the period April 1999 to September 2002. The issue revolved around the Department's rejection of modvat credit for inputs used in water purification and electricity generation, with part of the electricity diverted to a housing colony. The Tribunal, in a previous ruling, had set aside demands for a larger period due to no suppression of facts. The current appeal also lacked allegations of suppression, leading to the setting aside of demands for the larger period as time-barred.

2. The appellant's counsel argued for setting aside demands covered within the limitation period, contending that excess electricity treated as waste when cleared to outsiders should not deny modvat benefits. Citing judgments from the Supreme Court and Tribunal, the appellant sought relief based on the principles established in those cases. The Department, however, opposed this argument, justifying the denial of modvat benefits for diverted electricity. Upon careful consideration, the Tribunal noted the absence of suppression or misrepresentation in the case, similar to the previous ruling. It held that modvat credit for items used in water purification and electricity generation should be extended, even if excess electricity was diverted to a housing colony, following the principles established in relevant judgments. Consequently, the confirmation of demands was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal's decision focused on the time bar for setting aside demands and the eligibility of modvat credit for excess electricity diverted to a housing colony. The ruling emphasized the absence of suppression of facts, leading to the setting aside of demands for the larger period and the extension of modvat benefits based on established legal principles.