High Court Upholds Interim Order on Credit for Input/Service in Electricity Production

Shree Cement Limited Versus The Commissioner (Appeals-II) & Ors.

Shree Cement Limited Versus The Commissioner (Appeals-II) & Ors. - TMI Issues involved:
Challenge to interim order passed by Commissioner (Appeals-II) under Section 35F of the Central Excise Act regarding credit for input/input service used in electricity production sold outside factory.

Analysis:
The writ petition challenged the interim order passed by the Commissioner (Appeals-II) regarding the entitlement of the appellants to credit for input/input service used in the production of electricity sold to a different legal entity outside the factory. The key question was whether the appellants could claim credit for electricity not captively consumed within the factory but sold externally. The High Court found the order justified as the supply of electricity was outside the factory premises. The Court also noted that no irreparable injury would be caused by dispensing with the deposit of the cenvat credit amount and the penalty imposed under the CENVAT Credit Rules, 2004. The Court allowed the appellants to deposit the specified amounts within thirty days to stay the recovery of interest and the remaining penalty until the appeal's disposal.

The High Court upheld the finding of fact recorded by the Adjudicatory Authority as prima facie appropriate, indicating no grounds for interference in the impugned order. Despite dismissing the writ petition and the stay application, the Court granted an extension of fifteen days for compliance with the order as requested by the petitioner's counsel. The judgment emphasized the importance of complying with the order within the extended timeline.

In conclusion, the High Court dismissed the writ petition challenging the interim order related to the credit for input/input service used in electricity production sold outside the factory premises. The Court found the order justified, allowed an extension for compliance, and dismissed the stay application. The judgment highlighted the need for timely compliance with the order and the legal consequences of failing to do so.