CENVAT credit on furnace oil stayed pending appeal amid conflicting Supreme Court rulings and Larger Bench referral.

Pre-deposit was waived and recovery stayed pending appeal where the dispute concerned CENVAT credit on furnace oil used for generating electricity in a unit manufacturing both dutiable and exempted goods. The issue arose under Rule 6(2) of the Cenvat Credit Rules, 2001 and 2002, with conflicting Supreme Court decisions on eligibility of credit for such use. As the latest position had referred the question to a Larger Bench, the appellate relief was granted and enforcement of the disputed dues was kept in abeyance during the appeal.

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Issues: Whether pre-deposit of the dues arising from the impugned order should be waived and recovery stayed pending disposal of the appeal, in view of conflicting Supreme Court decisions on eligibility of CENVAT credit on furnace oil used in the manufacture of exempted goods.

Analysis: The applicant was manufacturing both dutiable and exempted goods and had taken credit on furnace oil used for generation of electricity. The dispute turned on Rule 6(2) of the Cenvat Credit Rules, 2001 and Rule 6(2) of the Cenvat Credit Rules, 2002. Conflicting decisions of the Supreme Court on the same issue were noticed, and the latest position referred the matter to a Larger Bench.

Outcome: Pre-deposit was waived for admission of the appeal and recovery of the disputed dues was stayed during pendency of the appeal.

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