2004 (2) TMI 241 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 57B for eligibility of Modvat/Cenvat credit on fuels used in manufacturing activities, specifically regarding the use of LSHS in the production of steam and electricity.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the appellants, engaged in manufacturing fertilizers and chemicals, availed Modvat/Cenvat credit for using LSHS as feed stock. The dispute arose regarding the portion of LSHS used for generating electricity supplied outside the factory. The lower authorities demanded duty payment and imposed penalties, contending that credit should be reversed for electricity generation. The appellants argued for consideration of Rule 57B, which allows credit on fuels used in manufacturing activities. The Tribunal noted the dispute period and the applicable rules, emphasizing the appellants' plea to assess credit eligibility under Rule 57B for fuels. The Tribunal highlighted that Rule 57B permits credit on fuels like LSHS if used in manufacturing steam within the factory, regardless of subsequent electricity generation. The judgment clarified that since steam was indeed produced and used in the factory, the denial of Modvat credit was unwarranted. Consequently, the appeal was allowed, and the lower authorities' orders were set aside, granting any necessary reliefs.