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2016 (11) TMI 772 - AT - Central ExciseReversal of CENVAT credit - consumable including furnace oil - furnace oil used in the manufacture of dutiable goods as well as final exempted goods cleared by availing the N/N. 04/97 and N/N. 5/98 - Whether credit of duty is admissible to the inputs in the present case in terms of erstwhile Rule 57C and 57CC of Central Excise Rules 1944 used in both dutiable as well as exempted goods when no separate account has been maintained nor 8% duty reversed in respect of clearances of exempted goods? - Held that - we find that the similar issue came up before the Hon ble Punjab and Haryana High Court in the case of Super Auto (I) Ltd. 2007 (10) TMI 23 - HIGH COURT PUNJAB AND HARYANA where it was held that the credit on furnace oil which was used as fuel is not required to be reversed - As the issue has already been settled in favour of the appellant therefore we hold that the furnace oil used as fuel by the appellant for manufacture of dutiable as well as exempted final products the appellant is not required to be reversed credit availed on furnace oil which has been used as fuel. Appeal allowed.
Issues:
1. Credit availed on furnace oil used in the manufacture of dutiable and exempted goods. 2. Interpretation of Central Excise Rules regarding the admissibility of credit on inputs used as fuel. 3. Precedents set by the Hon'ble Punjab and Haryana High Court and the Hon'ble High Court of Madhya Pradesh on similar issues. Issue 1: Credit availed on furnace oil used in the manufacture of dutiable and exempted goods. The appellant received a show cause notice alleging improper credit availed on furnace oil used in manufacturing dutiable and exempted goods. The adjudicating authority observed a contravention of Central Excise Rules and specific notifications. The appellant contested the order, citing a previous judgment by the Hon'ble Punjab and Haryana High Court in a similar case. The appellant argued that the issue was already settled in their favor, hence the impugned order should be set aside. Issue 2: Interpretation of Central Excise Rules regarding the admissibility of credit on inputs used as fuel. The Tribunal analyzed the provisions of Rule 57C and Rule 57CC of the Central Excise Rules in detail. It was noted that Rule 57C(2) and (3) do not apply to inputs intended for use as fuel. The judgment highlighted the requirement for separate inventory and accounts for inputs used in manufacturing exempted goods. The Tribunal emphasized that in cases where inputs are intended for use as fuel, the provisions of Rule 57CC(1) and (9) do not apply. The judgment clarified that the appellant, using furnace oil solely as fuel, was entitled to Modvat Credit, as per the Tribunal's findings. Issue 3: Precedents set by the Hon'ble Punjab and Haryana High Court and the Hon'ble High Court of Madhya Pradesh on similar issues. The judgment referred to the decisions of the Hon'ble Punjab and Haryana High Court in Super Auto (I) Ltd. and the Hon'ble High Court of Madhya Pradesh in Flex Chemicals Ltd. In both cases, the courts upheld the admissibility of Modvat credit on inputs used as fuel in manufacturing final products. The judgments emphasized the specific provisions of Rule 57C and Rule 57CC, stating that the conditions for credit allowance differ based on the intended use of inputs. The courts concluded that where inputs are used as fuel, separate compliance with certain rules is not necessary, aligning with the Tribunal's decision in the present case. In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment reaffirmed the entitlement of Modvat Credit for inputs used as fuel in the manufacturing process of dutiable and exempted goods. The detailed analysis of Central Excise Rules and precedents established a clear interpretation regarding the admissibility of credit in such cases.
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