2019 (11) TMI 15 - HC - Central Excise

CESTAT overturns duty demand on electricity inputs; penalty on GM reversed. Appeal withdrawn due to revised limits.

Commissioner of Central Excise Versus Sh. RK Gupta, General Manager (Excise)

Commissioner of Central Excise Versus Sh. RK Gupta, General Manager (Excise) - TMI Issues:1. Admissibility of Cenvat Credit on inputs used in the generation of electricity cleared outside the factory.2. Imposition of penalty on the General Manager for ommissions and commissions.Analysis:Issue 1: Admissibility of Cenvat Credit on inputs used in the generation of electricity cleared outside the factory.The appeal under Section 35(G) of the Central Excise Act, 1944 was filed by the Revenue against the order passed by CESTAT, New Delhi. The respondent-assessee's appeal was accepted by CESTAT, holding that the demand for payment of duty on inputs used in the generation of electricity cleared outside the factory was not sustainable. The key question raised was whether the electricity generated and sold outside the factory could be considered captively used for manufacturing final products, making the Cenvat Credit availed on inputs admissible under relevant provisions. The appellant argued that the Ld. CESTAT's decision on inadmissible Modvat/CENVAT Credit was incorrect.Issue 2: Imposition of penalty on the General Manager for ommissions and commissions.The respondent, who was the General Manager of the manufacturing company, was held responsible for the ommissions and commissions related to the clearance of electricity generated outside the factory without payment of duty. The Adjudicating Authority confirmed the demand and imposed a penalty of Rs. 5 lakhs on the respondent. The question raised was whether the penalty was imposable under specific rules upon the General Manager for his role in the matter. The appeal before CESTAT was allowed, leading to the Revenue's appeal before the High Court.The respondent company, engaged in manufacturing various goods, had availed MODVAT/CENVAT credit on duty paid inputs and capital goods. A captive power plant was installed for electricity generation using specific fuels for which Modvat/Cenvat Credit was availed. Part of the electricity generated was cleared to the electricity board without duty payment, leading to the demand and subsequent legal proceedings. The appeal was filed against the order imposing penalty and confirming the demand.In a subsequent development, an application was filed seeking permission to withdraw the appeal based on revised monetary limits for filing appeals and the penalty amount falling below the threshold limit. The application was supported by an affidavit of the appellant's counsel, leading to the appeal being dismissed as withdrawn based on the revised instructions and the penalty amount being below the prescribed threshold.In conclusion, the judgment addressed the admissibility of Cenvat Credit on electricity generation inputs cleared outside the factory and the imposition of penalties on the General Manager for ommissions and commissions. The decision highlighted the interpretation of relevant excise rules, the company's utilization of credit facilities, and the subsequent legal proceedings leading to the appeal and its withdrawal based on revised monetary limits and penalty thresholds.