Cenvat credit on duty-paid excess electricity from a 100% EOU justified full waiver of pre-deposit.

Duty paid on excess electricity supplied by a 100% EOU to a DTA unit supported a prima facie claim to Cenvat credit, because the record showed the payment related to electricity received rather than inputs used in power generation. In view of the applicable Board circular permitting sale of excess power by an EOU on payment of duty, the appellants established a sufficient case for interim relief. Unconditional waiver of pre-deposit was therefore granted and recovery was stayed pending disposal of the appeal.

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Issues: Whether unconditional waiver of pre-deposit was justified where the appellants had received electricity from a 100% EOU on payment of duty and claimed Cenvat credit thereon.

Analysis: The show cause notice itself recorded that duty of Rs. 61,38,256/- had been paid on excess electricity received from the EOU. The order proceeded on the mistaken basis that credit had been taken on inputs used in generating power, whereas the record indicated that the duty-related amount pertained to electricity received by the appellants. In view of the Board circular permitting sale of excess power by an EOU to a DTA unit on payment of duty, the appellants had made out a prima facie case for availing the credit benefit and for suspension of recovery pending appeal.

Conclusion: Unconditional waiver of pre-deposit was granted and recovery was stayed till disposal of the appeal.

Final Conclusion: The matter was held fit for interim protection, with the appellants obtaining full waiver of pre-deposit pending the appeal.

Ratio Decidendi: Where duty has been paid on excess electricity supplied by a 100% EOU to a DTA unit under the applicable circular, a prima facie entitlement to Cenvat credit can justify waiver of pre-deposit.

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