2011 (6) TMI 484 - AT - Central Excise

Whether the appellants are entitled to take the CENVAT credit on furnace oil, which has been used as fuel in the manufacturing of their dutiable final products as well as in the job-work activity - job-worked goods were cleared by the principal manufacturers on payment of duty Held that - only objection of the learned SDR is that it is not pleaded before the lower authorities. Therefore, the matter needs examination, Appeal is allowed by way of remand

Summary

Issues:
1. Appeal against demand of duty on account of wrong availment of CENVAT credit on Furnace oil.
2. Whether separate account of fuel used in dutiable products and exempted goods is required to be maintained.
3. Entitlement to CENVAT credit on furnace oil used in manufacturing dutiable final products and job-work activity.

Analysis:
1. The appellants challenged the demand of duty for wrongly availing CENVAT credit on Furnace oil used in their manufacturing and job-work activities. They did not maintain a separate account of the oil used in each activity, leading to a show-cause notice for reversal of CENVAT credit, interest, and penalty under Section 11AC of the Central Excise Act, 1944. The Tribunal observed the application for restoration of appeal as infructuous, having been disposed of earlier.

2. The crux of the matter revolved around the necessity of maintaining a separate account for fuel used in dutiable products and exempted goods. The appellants argued that Rule 6(2) of Cenvat Credit Rules, 2004 exempted fuel from separate account maintenance during the relevant period. They cited precedents to support their contention. Conversely, the Revenue contended that the issue had been settled by the Supreme Court's decision in Commissioner of Central Excise Vs. Gujarat Narmada Fertilizers Co. Ltd., where it was established that CENVAT credit on fuel used in manufacturing exempted goods is not permissible.

3. The Tribunal acknowledged the settled law per the Supreme Court's decision and denied the appellants' entitlement to CENVAT credit on furnace oil used in manufacturing exempted goods. However, regarding the job-worked goods cleared by the principal manufacturers on payment of duty, the Tribunal found a need for further examination. As the appellants had not raised this point earlier, the matter was remanded to the original adjudicating authority for consideration. The authority was directed to determine if the appellants could claim credit for furnace oil used in job-work activity on goods cleared by the principal manufacturer on payment of duty.

In conclusion, the appeal was allowed by way of remand, setting aside the impugned order for further examination and a fresh decision based on the clarified aspects of the case.