2013 (9) TMI 1111 - AT - Central Excise

Summary

Issues involved: Determination of whether the respondents are required to reverse proportionate credit availed on furnace oil containing sludge settled during storage.

Summary:
The Appellate Tribunal CESTAT NEW DELHI, comprising Mrs. Archana Wadhwa and Mr. Manmohan Singh, addressed the issue of whether the respondents must reverse credit on furnace oil with settled sludge. The Tribunal noted that duty was paid on both the oil and sludge, and cited precedents such as CCE, Bangalore-I vs. Geltech Ltd. (2012), Larsen & Toubro Ltd. vs. CCE, Rajkot (2004), and Indo Rama Synthetics (India) Ltd. vs. CCE, Nagpur (2005) to support the non-excisable nature of sludge. Additionally, the Board's circular and Rule 3(3) of Cenvat Credit Rules, 2002 were deemed inapplicable as the sludge was considered waste and not an input being removed by the assessee. The Tribunal upheld the Commissioner (Appeals) order, rejecting the Revenue's appeals based on the principles established in Geltech Ltd. case by the Hon'ble Karnataka High Court.

The judgment clarified that the respondents were not obligated to reverse credit for the sludge quantity in the furnace oil, as it was not an excisable item and was treated as waste. The Tribunal emphasized that the duty was paid on both the oil and sludge, and the provisions of Cenvat Credit Rules were not applicable in this context. By referencing relevant case law and the Board's circular, the Tribunal affirmed the decision of the Commissioner (Appeals) and dismissed the Revenue's appeals.