Cenvat credit on fuel for electricity supply outside the factory did not justify total waiver of pre-deposit.

Cenvat credit on fuel used to generate electricity was claimed under Rule 2(g) where part of the electricity was supplied to independent vendors outside the factory. The Tribunal distinguished an earlier stay order relied on by the applicant because that case involved supply to the assessee's own units through a common grid, not external supply to independent manufacturers. On these facts, the applicant did not establish a prima facie case for total waiver of pre-deposit. Only partial waiver was granted, subject to deposit of Rs. 15 lakhs, while the balance of duty and penalty was waived for hearing purposes.

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Issues: Whether, for purposes of waiver of pre-deposit, the applicant made out a prima facie case for Cenvat credit on fuel used in generating electricity when part of the electricity was supplied to independent vendors outside the factory.

Analysis: The credit claim was based on Rule 2(g) of the Cenvat Credit Rules, 2002. The applicant relied on an earlier stay order in a different matter, but the facts were distinguished. The present case involved electricity generated from naphtha being supplied outside the factory to independent manufacturers, whereas the earlier matter concerned supply to own units through a common grid. On those facts, the Tribunal held that the applicant had not established a case for total waiver of pre-deposit.

Conclusion: The applicant was granted only partial waiver, subject to deposit of Rs. 15 lakhs, and the balance of duty and penalty was waived for the purpose of hearing the appeal.

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