Case Note & Summary
The judgment concerns intra-court writ appeals filed by the Revenue before the Madurai Bench of the Madras High Court against a common order dated 10.10.2023 passed by a single judge in Review Application (MD) Nos.139 to 150 of 2023, arising from Writ Petition (MD) Nos.6895 to 6906 of 2022. The respondent assessee, a manufacturer of sugar and molasses, had availed CENVAT credit on capital goods used in establishing a captive power plant. The Revenue considered this availment wrongful and issued twelve show cause notices covering periods from February 2008 to March 2015. These notices were kept in the call book because an earlier appeal involving the same assessee was pending before the Supreme Court. After the Supreme Court appeals in C.A.No.2039-2040 of 2011 were withdrawn on the ground of low monetary value under the National Litigation Policy, the show cause notices were taken out for adjudication. The assessee then filed writ petitions challenging the show cause notices. On 28.06.2023, the writ court disposed of the writ petitions by directing the assessee to appear before the Commissioner of CGST and Central Excise on 12.07.2023 and directing the first respondent to follow the order-in-original dated 31.03.2023 in the case of M/s.EID Parry (India) Ltd., which had allowed CENVAT credit on similar machinery used in a co-generation plant. The writ court also recorded that the assessee had conceded non-pressing of two writ petitions where payments were already made. Pursuant to this direction, the Revenue insisted that the assessee produce a User Test Certificate (UTC), as had been done in the EID Parry case. Aggrieved by this demand, the assessee filed review applications seeking review of the order dated 28.06.2023. The single judge heard the review applications not only on the UTC issue but also on merits and allowed both the review applications and the writ petitions by order dated 10.10.2023. The Revenue then filed the present appeals. The core legal issues were whether the User Test Certificate is mandatory for availing CENVAT credit on capital goods used in a captive power plant, whether the review applications were maintainable, whether the show cause notices were barred by limitation, and whether the assessee could avail CENVAT credit on capital goods used for generating electricity which is exempt from excise duty. The Revenue contended that the demand for UTC was consistent with the EID Parry order, which was based on the Supreme Court decisions in Commissioner of Central Excise, Coimbatore v. Jawahar Mills Ltd. and Commissioner of Central Excise, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd., and that the review applications ought not to have been entertained. The assessee argued that those Supreme Court judgments did not mandate a UTC, that no doubt had been raised in the show cause notices about the usage of the machinery, and that the sudden demand was an afterthought. The assessee also contended that the only ground in the show cause notices—that credit was wrongly availed because the end product electricity was exempt—had been concluded or given up when the Supreme Court appeals were withdrawn. The provided text does not include the court's final analysis or operative direction; the judgment excerpt ends after recording the submissions of both sides. Therefore, the final decision and ratio decidendi are not available from the provided portion.
Headnote
A) Central Excise - CENVAT Credit - User Test Certificate Requirement - CENVAT Credit Rules, 2004 - The assessee availed CENVAT credit on capital goods used in a captive power plant, and the Revenue sought production of a User Test Certificate during adjudication after the writ court directed the Commissioner to follow an earlier order in EID Parry (India) Ltd. - The dispute concerned whether such certificate was mandatory where the show cause notices did not allege any doubt as to the usage of the machinery, and the Revenue contended it was necessary to complete adjudication consistent with the EID Parry order (Paras 2, 4-11, 15-18). B) Writ Jurisdiction - Review Applications - Maintainability and Merits - Letters Patent Clause 15 - The Revenue argued that the review applications were not maintainable as the earlier writ court order merely directed the assessee to appear and follow the EID Parry order, and that demanding the User Test Certificate was not an afterthought; the assessee contended the demand was new and sought review to prevent injustice - The single judge entertained the review applications and decided the writ petitions on merits, including the issue of limitation, leading to these intra-court appeals (Paras 12-18).
Issue of Consideration
Whether User Test Certificate is mandatory for availing CENVAT credit on capital goods used in co-generation plant; whether review applications were maintainable; whether show cause notices were barred by limitation; whether CENVAT credit can be availed on capital goods used for generation of exempted electricity
Law Points
- CENVAT Credit on capital goods used in captive power plant
- User Test Certificate not mandatory if no doubt on usage
- show cause notices kept in call book
- withdrawal of Supreme Court appeals on low monetary limit
- review application maintainability
- consistency with EID Parry order-in-original
- application of CENVAT Credit Rules
- 2004
- adjudication of show cause notices under Central Excise law
