Cenvat credit on fuel for captive electricity required fresh tribunal decision on whether power was cleared to the electricity board.

Credit on fuel used to generate electricity was disputed on the ground that the electricity was allegedly cleared to the electricity board rather than consumed within the factory for manufacture. The Tribunal proceeded on the basis of a wheeling arrangement and treated the demand as unsustainable, but the High Court held that the core controversy had not been decided because the department's case on sale or clearance of the generated electricity was not examined. The matter was therefore remanded to the Tribunal for a decision on that substantive issue.

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Issues: Whether the Tribunal had decided the substantive dispute as to admissibility of credit on fuel used to generate electricity that was allegedly cleared to the electricity board instead of being used within the factory, and whether the matter required remand for decision on that issue.

Analysis: The adjudicating authority had proceeded on the basis that credit on fuel used for generation of electricity injected into the grid and adjusted in the electricity bill was inadmissible because the electricity was not used within the factory for manufacture of final products. The Tribunal, however, proceeded on the footing that the same quantity of electricity was received back under the wheeling arrangement and therefore held the demand unsustainable. The High Court found that the core controversy was not actually determined by the Tribunal, since the Tribunal did not examine the department's case that the electricity generated in the captive plant was sold or cleared to the electricity board and, on that basis, the credit had been wrongly availed.

Conclusion: The matter was required to be remanded to the Tribunal for decision on the substantive dispute.

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