2012 (8) TMI 838 - AT - Central Excise

Cenvat credit - Revenue was of the view that the Organic Composite Solvent and Thinner not elsewhere specified, prepared paints could not be considered to be input used in the manufacture of biscuits - Held that - this is not an item which is normally used as fuel and also considering the classification under which supplier of the goods had classified the goods, it is very obvious that the goods in question was not meant for use as fuel - Decided against assessee.

Summary

Issues:
1. Whether the item "OCS-III" classified under Tariff Item No. 3814.0010 qualifies as an input for Cenvat credit in the manufacture of biscuits.

Analysis:
The appellant, a biscuit manufacturer, had taken Cenvat credit on the item "OCS-III" during May 2005 to February 2006. The Revenue contended that this item did not qualify as an input for biscuit manufacturing, leading to proceedings for recovery of the availed Cenvat credit. After adjudication, an amount was confirmed against the appellant along with interest and penalty.

The Counsel for the appellant argued that the item was used as fuel in the manufacturing process, thus qualifying as an input. It was emphasized that the Revenue failed to demonstrate that the item could not be used as fuel, as it was alleged that only furnace oil and light diesel were used for baking biscuits. On the other hand, the Revenue argued that the item was classified as a material used as thinners along with paints, and there was no evidence of such items being used as fuel in a biscuit manufacturing factory. The burden of proof was placed on the appellant to show that the goods were used as fuel.

The core issue revolved around the burden of proof regarding the usage of the item as fuel. The Tribunal considered the classification of the goods and the normal usage pattern. Given that the item was not typically used as fuel and was classified accordingly, it was concluded that the goods in question were not intended for use as fuel in biscuit manufacturing. Consequently, the appeal was rejected, affirming the Revenue's position.

In conclusion, the Tribunal's decision hinged on the burden of proof regarding the usage of the item "OCS-III" as fuel in biscuit manufacturing. The classification and typical usage of the item played a crucial role in determining its eligibility as an input for Cenvat credit. The appellant's failure to demonstrate the item's usage as fuel led to the rejection of the appeal, upholding the Revenue's stance on the matter.