2014 (1) TMI 1114 - AT - Central Excise

Tribunal grants waiver & stay on CENVAT Credit Rule 6(3) demand, citing inconsistencies & precedent

The Tribunal granted the appellant's request for waiver and stay regarding a demand under Rule 6(3) of the CENVAT Credit Rules 2004 for electricity ... Exisability of Product – Demand made under Rule 6(3) of CENVAT Credit Rules 2004 – Electricity produced for making use certain inputs – Waiver of Pre-deposit – Held that:- The Commissioner appears to have travelled beyond the scope of the show-cause notice by observing that the assessee ought to have reversed the CENVAT credit taken on inputs used in or in relation to generation of electricity - The show-cause notice had demanded 10% of the price of electricity sold by the assessee - two rounds of litigation have come through before the Commissioner (Appeals) with no consistent view having been taken by any of the authorities having regard to the case of the Revenue as made out in the show-cause notice – pre-deposits waived till the disposal – Stay granted. Issues:1. Demand quantified under Rule 6(3) of CENVAT Credit Rules 2004 for electricity production.2. Lack of separate accounts for common inputs used in manufacturing and electricity generation.3. Appeal against Commissioner (Appeals) decision pending before Tribunal.4. Granting of waiver and stay based on a similar case.Analysis:1. The appellant sought waiver and stay regarding a demand of Rs. 42,81,805/- under Rule 6(3) of the CENVAT Credit Rules 2004 for electricity production. The demand was based on the contention that electricity produced using inputs with CENVAT credit was a non-excisable product. The show-cause notice alleged lack of separate accounts for common inputs used in manufacturing dutiable final products and generating non-excisable electricity. The original authority confirmed the demand, and the appellate authority directed the reversal of CENVAT credit on inputs used for electricity generation.2. Following the appellate authority's direction, the original authority reaffirmed the demand and imposed a penalty. The appellate authority, in the subsequent litigation, rejected the appellant's appeal, stating the need to reverse CENVAT credit taken on inputs used for electricity generation sold outside the factory. The appellant highlighted a similar case where waiver and stay were granted based on electricity being non-excisable.3. The counsel for the appellant argued that the Commissioner (Appeals) had overstepped by requiring the reversal of CENVAT credit on inputs related to electricity generation beyond the show-cause notice's scope. The Tribunal noted inconsistencies in previous decisions and observed that if irregular CENVAT credit was the issue, the demand would have differed. Considering the lack of consistent views and the precedent of granting waiver and stay in similar cases, the Tribunal granted the appellant's request.4. The Tribunal ordered the tagging of Appeal No. E/841/2008 with the current appeal for future hearings. The judgment concluded with the decision to grant waiver and stay as requested by the appellant, citing the lack of successful contestation of the prima facie case and the precedent of similar cases where relief was granted.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the proceedings and the Tribunal's decision.