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2012 (6) TMI 694 - CESTAT, CHENNAIApplicability of Rule 57C(1)(ii) – Assessee used naphtha for manufacture of steam, which in turn was used for generation of electricity and the electricity was supplied to 100% export oriented unit – Held that:- The order passed by the CESTAT is liable to be set aside as in case electricity was not used wholly in the factory of production, the question of availing modvat credit does not arise and it can be availed only proportionately - applicability of Rule 57C (1) (ii) has to be decided by the CESTAT on merits - Rule 57C(1) states that no credit of duty shall be allowed on such quantity of inputs which is used in the manufacture of final products which are exempt from duty or are chargeable to nil duty. However, one of the exceptions provided to Rule 57C (1) relates to cases where the final products are cleared to a 100% EOU - the matter is remanded to the original authority who shall cause the necessary verification and decide the matter afresh keeping in view the provisions of Rule 57C(1)(ii).
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