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2025 (1) TMI 1439 - HC - Central ExciseCENVAT Credit - electricity generated by the respondent s captive power plant and subsequently cleared to the Haryana State Electricity Board (HSEB) was used in the manufacture of final products within the factory - suppression of facts or not - extended period of limitation - HELD THAT - The dispute in the present case is that the electricity generated in captive plant was not used in or relation to manufacture of final products within the factory of production but was sold to HSEB whereas learned Tribunal did not decide this dispute and held that there is no dispute with regard to the appellant receiving same quantity of electricity which was cleared to the Electricity Board therefore the issue in dispute was never decided by the learned Tribunal. The matter was remanded for reconsideration of whether the electricity was used in manufacturing within the factory as required for credit eligibility.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Eligibility for Modvat/CENVAT Credit on Fuel Used for Electricity Generation Relevant Legal Framework and Precedents: The legal framework involves Rule 57A and 57B of the Central Excise Rules, 1944, and subsequent amendments, which allow Modvat/CENVAT credit on inputs used for generating electricity, provided the electricity is used in manufacturing final products within the factory. Court's Interpretation and Reasoning: The Court focused on whether the electricity was used within the factory for manufacturing final products. The Commissioner argued that the electricity was sold to HSEB, thus not meeting the criteria for credit eligibility. The Tribunal, however, found that the respondent received back the same quantity of electricity from HSEB, which was used in manufacturing, thus supporting credit eligibility. Key Evidence and Findings: The agreement between the respondent and HSEB allowed for the exchange of electricity to maintain uniform frequency. The Tribunal noted that the respondent received back the same quantity of electricity, which was used in manufacturing. Application of Law to Facts: The Tribunal applied the law by determining that the receipt and use of the same quantity of electricity within the factory met the legal requirements for credit eligibility. Treatment of Competing Arguments: The appellant argued that the electricity was sold, not used in manufacturing. The respondent countered that the exchange was necessary for operational stability, and the electricity was indeed used in manufacturing. Conclusions: The Tribunal concluded that the demand for disallowing credit was unsustainable, as the electricity was effectively used in manufacturing. 2. Suppression of Facts and Extended Limitation Period Relevant Legal Framework and Precedents: The invocation of the extended limitation period requires evidence of suppression of facts with intent to evade duty, as per Rule 571 (1) (ii) of the Central Excise Rules, 1944, and related provisions. Court's Interpretation and Reasoning: The Commissioner alleged suppression due to the non-disclosure of electricity clearance to HSEB. The Tribunal did not address this issue directly, as it focused on the electricity exchange agreement. Key Evidence and Findings: The Commissioner highlighted the lack of evidence that the agreement with HSEB was disclosed to the department. The Tribunal's decision did not delve into this aspect. Application of Law to Facts: The Tribunal's decision did not explicitly address whether suppression occurred, focusing instead on the electricity exchange. Treatment of Competing Arguments: The appellant maintained that suppression justified the extended period, while the respondent argued that the department was aware of the electricity generation and agreements. Conclusions: The Tribunal's decision did not resolve the suppression issue, leading to the remand for further consideration. SIGNIFICANT HOLDINGS The Court identified a critical oversight in the Tribunal's decision, noting that the core dispute-whether the electricity was used in manufacturing or sold-was not resolved. The Tribunal's reliance on the electricity exchange agreement did not address the appellant's contention that the electricity was sold. Core Principles Established: The judgment underscores the importance of determining the actual use of electricity in manufacturing for credit eligibility and the necessity of addressing all material disputes in adjudication. Final Determinations on Each Issue:
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