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2013 (5) TMI 89 - AT - Central ExciseCenvat credit on furnace oil - denial of claim - assessee contested that oil which was used by them in the manufacture of goods on job work basis - Revenue appeal that Commissioner (Appeals) has erred by not confirming interest on wrong availment of Cenvat credit - Held that - In cases of manufacturers like the Appellants the final product is the tractor. The intermediate product would be parts which are manufactured for being used in the tractor. In such a case the parts would not be the final product. Thus Rule 57C would have no application. The mere fact that the parts are cleared from one factory of the Appellants to another factory of the Appellants would not disentitle the Appellant from claiming benefit of Notification No. 217/86-C.E., dated 2nd April, 1986 which itself clarifies that the inputs can be used within the factory of production or in any other factory of the same manufacturer. By applying the ratio of Sterlite Industries (I) Limited vs. CCE, Pune 2004 (12) TMI 108 - CESTAT, MUMBAI it becomes clear that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Inasmuch as, the matter stands decided by the Honourable Supreme Court, we would hold in favour of assessee. Also see ESCORTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, DELHI 2004 (8) TMI 106 - SUPREME COURT OF INDIA - In favour of assessee.
Issues:
1. Denial of Cenvat credit on furnace oil used in manufacturing goods. 2. Interest and penalty imposition for wrong availment of Cenvat credit. 3. Reversal of CESTAT judgment by Gujarat High Court. 4. Non-imposition of penalty and non-confirmation of interest. Analysis: 1. The appeal filed by the assessee challenged the denial of Cenvat credit on the quantity of furnace oil used in manufacturing goods on job work basis. The contention was based on Notification No.214/86-CE read with Rule 57A(5) of Central Excise Rules. CESTAT Ahmedabad allowed the appeal citing a Larger Bench judgment in a similar case. However, the Revenue's appeal against the same order was rejected. Subsequently, the Revenue approached the High Court of Gujarat, which reversed the CESTAT judgment and remanded the proceedings for fresh consideration, emphasizing the reversal of a previous decision by the Supreme Court. 2. The issue of interest and penalty imposition for the wrong availment of Cenvat credit was raised by the Revenue in their appeal. The Commissioner (Appeals) was criticized for not confirming interest under Section 11AB of the Central Excise Act, 1944, and for not imposing a penalty as per Rule 173 Q(1) of the Central Excise Rules. The High Court of Gujarat remanded this matter to CESTAT for fresh consideration, highlighting the need for a comprehensive review. 3. The Gujarat High Court reversed the CESTAT judgment based on the Supreme Court's decision, leading to a remand of the case for further examination. The Revenue's appeal against the non-imposition of penalty and non-confirmation of interest was also remanded to CESTAT for a fresh assessment, indicating the complexity and significance of the legal issues involved in the case. 4. The legal arguments presented by both sides referenced settled law, particularly citing the case of Sterlite Industries (I) Limited vs. CCE, Pune. The CESTAT Larger Bench judgment in this case was crucial in resolving the dispute over the availment of Cenvat credit, as upheld by the High Court of Bombay and followed in subsequent cases. Ultimately, the appeal filed by the assessee was allowed, while the Revenue's appeal was rejected, emphasizing the adherence to established legal principles and precedents in deciding the case.
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