2017 (8) TMI 1113 - HC - Central Excise

Court upholds CESTAT order on CENVAT credit for furnace oil used in steam production

The Court upheld the CESTAT order in a case concerning CENVAT credit on furnace oil used for steam production and supply to a sister concern. The ... CENVAT credit - captive consumption - steam produced by appellant used by sister concern - The main unit was using Furnace Oil as fuel for production of steam in the boiler. The steam so produced is consumed captively by the main unit. The steam was also supplied by the Respondent to their adjoining sister concern, namely, M/s. Alkem Laboratories through pipelines - Held that: - the Appellant can in no way be aggrieved by the impugned order of CESTAT since CESTAT has merely remanded the matter back upon the contention of the revenue that it was not known whether the sister concern of the Respondent had cleared the final product in which steam was generated on payment of duty or not. CESTAT has directed verification of the payment of duty by the sister concern by the adjudicating authority and only upon verification, it would be determined whether the end products of the sister concern are cleared on payment of duty and if that is answered in the affirmative, then CENVAT credit cannot be denied to the Respondent - appeal dismissed being not admitted. Issues:Challenge to impugned order of CESTAT regarding CENVAT credit on furnace oil used for steam production and supply to sister concern.Analysis:The case involved a dispute over the availing of CENVAT credit by a pharmaceutical manufacturer for using furnace oil to produce steam, which was consumed internally and supplied to a sister concern. The Appellant challenged the CESTAT order alleging contravention of CENVAT Credit Rules. The Respondent argued that the steam diversion was permissible as the sister concern paid duty on final products. CESTAT remanded the case for verification of duty payment by the sister concern.The Appellant contended that the CESTAT should have dismissed the Appeal as the steam was diverted outside the factory, making the Respondent ineligible for CENVAT credit. The Respondent, supported by senior counsel, defended the CESTAT judgment. The Court noted that CESTAT's remand was based on verifying duty payment by the sister concern to determine CENVAT credit eligibility. The Court found no grounds for the Appellant's grievance with the CESTAT order, dismissing the Appeal.The Court emphasized that the CESTAT's remand was to ascertain if the sister concern cleared final products with duty payment, impacting CENVAT credit eligibility. As the Appeal did not raise substantial legal questions and the matter required verification, the Court upheld the CESTAT order and dismissed all related Appeals. No costs were awarded in the case.