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 Appellant's challenge was dismissed as the Court found no merit in their argument that the steam diversion made the Respondent ineligible for the credit. The CESTAT's remand was deemed necessary to verify duty payment by the sister concern, impacting the eligibility for CENVAT credit. The Court emphasized the importance of duty payment by the sister concern for determining credit eligibility and dismissed all related Appeals without costs.

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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.

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