2012 (8) TMI 942 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for Cenvat Credit on Low Sulphur Heavy Stock (LSHS) used as fuel in the generation of steam for manufacturing exempted fertilizer.
2. Applicability of the principle of res judicata.
3. Interpretation of legal provisions and the ratio decidendi.

Summary:

1. Eligibility for Cenvat Credit on LSHS:
The primary issue is whether the appellant is eligible for Cenvat credit on LSHS used as fuel in generating steam for manufacturing exempted fertilizer. The Tribunal previously decided in favor of the appellant, which was upheld by the Supreme Court. However, the Commissioner, in the impugned order, denied the credit based on a subsequent Supreme Court decision in the case of Gujarat Narmada Fertilisers Ltd. (GNFC) - 2009 (240) ELT 661 (S.C.), which held that GNFC is not eligible for Cenvat credit on LSHS used in manufacturing steam for fertilizers, as per Rule 6 of the Cenvat Credit Rules.

2. Applicability of Res Judicata:
The appellant argued that the principle of res judicata should apply, citing the Supreme Court's decision in their own case. The Revenue countered that the decision in the appellant's case was not on merits but based on the acceptance of the Tribunal's decision in Raymond Ltd. The Supreme Court in cases like Hira Cements and BSNL has held that res judicata does not apply in tax matters for different assessment years, allowing the Revenue to reopen issues if subsequent legal interpretations differ.

3. Interpretation of Legal Provisions and Ratio Decidendi:
The appellant contended that the Commissioner should have followed the Supreme Court's decision in their own case, emphasizing the ratio decidendi. The Revenue argued that the decision in GNFC, which examined Rule 6(1) and Rule 6(2) of the Cenvat Credit Rules, should prevail as it provided a detailed interpretation of the rules. The Tribunal agreed with the Revenue, noting that the Supreme Court in GNFC had conclusively interpreted the relevant provisions, establishing a clear ratio decidendi that must be followed.

Conclusion:
The Tribunal found no merit in the appeal, rejecting the appellant's claim for Cenvat credit on LSHS used in generating steam for manufacturing exempted fertilizer. The decision in GNFC was deemed binding and applicable, overriding the earlier decision in the appellant's case due to its detailed legal analysis and subsequent ruling.