S.L. Peeran, Member (J)

1. For the purpose of hearing this appeal, the appellants are required to pre-deposit Rs. 61,38,256/-. The appellant had obtained excess electricity produced by the 100% EOU unit managed by their own company. The electricity procured by them had discharged the duty amount of Rs. 61,38,256/-. They had availed Cenvat credit on this amount. The show cause notice dated 18-2-2005 in Para 3 clearly admits that the assessee has paid this amount towards the excess electricity procured by them. The Show Cause Notice proceeded to deny the credit on raw materials/consumables used in the generation of power on the ground that the same was irregularly availed and it is required to be reversed.

2. The learned Counsel submits that electricity is notified under Chapter Heading 2716.00 of the Excise Tariff. He further submits that the show cause notice has proceeded on wrong precise that they have availed Cenvat credit on the inputs used in the generation of power. He has pointed out to the document which evidences the payment of duty on electricity procured by them. He submits that the Commissioner has also confused himself in the impugned order and has proceeded to analyze the facts on the precise that the assessee has proceeded to avail the Cenvat credit on the inputs used in the generation of electricity. While the fact of the case is that they have availed Cenvat credit on the duty paid inputs on the excess power received by them. He also refers to the Boards Circular No. 22/2003-Cus., dated 31-3-2003 wherein the permission for sale of power by EOUs in domestic tariff has been permitted on payment of duty. As the appellants have received the power on payment of duty, they are eligible to avail the Cenvat credit. He submits that the duty paid on inputs for generation of excess is demanded to be payment of duty on electricity received by them, as noted in the said Boards Circular. He submits that the order passed by the Commissioner is not legal and proper and also not a speaking order, as the facts has been completely confused by the Commissioner.

3. The learned SDR reiterated the Commissioners findings.

4. On a careful consideration and perusal of show cause notice, it is clear that the show cause notice in Para 3 clearly brings out that the assessee had paid duty amount of Rs. 61,38,256/- on the excess power received by them from their EOU unit in terms of the above cited Boards Circular. An EOU unit can sell excess power generated by them to DTA unit on payment of duty. Therefore, the finding given by the Commissioner that the assessee has proceeded to avail Cenvat credit on the inputs used in the generation of electricity is not a correct finding. The duty paid on inputs is deemed to be duty paid on excess electricity generated and sold to the appellant in terms of the deeming provisions and noted Boards circulars. The fact of the case clearly discloses that the appellants have paid duty on the power received by them (electricity power). At this stage, we are not in a position to come to a conclusion that the appellants are not entitled for availing the benefit of Cenvat credit. As they are eligible to avail the benefit in terms of the cited Boards circular and as such the order confirming demand is not legal and proper. The stay application is allowed unconditionally granting full waiver of pre-deposit. There shall be no recovery by Revenue till the disposal of the appeal. As the amount involved is high, the prayer for early hearing is accepted.

(Pronounced and dictated in open Court)