2017 (9) TMI 607 - AT - Central Excise

MODVAT/CENVAT credit - furnace oil - Revenue sought to deny the credit essentially on the ground that the said goods were not brought in the factory of the appellant but were sent to the premises of the adjacent unit where boiler and furnace was installed - Rule 57I of the Central Excise Rules 1944 - Held that - Its apparent from this Rule 57B(1) of Central Excise Rules 1944 that credit of inputs used for generation of steam would be allowed provided the steam manufactured is used within the factory of production - it is apparent that the Commissioner (Appeals) recognised that the credit is admissible provided specified procedure are followed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of modvat credit on furnace oil under Rule 57I of the Central Excise Rules 1944.
2. Interpretation of Rule 57B(1) regarding admissibility of cenvat credit for inputs used for generation of steam within the factory of production.
3. Comparison of the present case with the appellant's subsequent period where the demand was dropped by the Commissioner (Appeals).

Analysis:
1. The appellant, a manufacturer of pharmaceutical products, appealed against the denial of modvat credit on furnace oil under Rule 57I of the Central Excise Rules 1944. The original adjudicating authority dropped the show-cause notice, but on appeal by the revenue before the Commissioner (Appeals), the demand was confirmed. The Tribunal remanded the matter to the original authority, and the demand was upheld in the subsequent rounds, leading the appellant to approach the Tribunal again.

2. The crux of the issue lies in the interpretation of Rule 57B(1) of the Central Excise Rules 1944, which allows manufacturers to take credit of specified duty paid on inputs used for generation of steam within the factory of production. The appellant argued that the goods were sent to an adjacent unit where a boiler and furnace were installed for steam generation, which the revenue used as grounds for denial. However, the Commissioner (Appeals) in a subsequent period recognized the admissibility of credit under similar circumstances, highlighting procedural compliance as crucial for credit allowance.

3. Notably, the Tribunal considered the appellant's subsequent period where the demand was dropped by the Commissioner (Appeals) for procedural infractions, indicating a favorable precedent. Given the procedural nature of the revenue's objections and the allowance of credit for the subsequent period, the Tribunal allowed the appeal, emphasizing the importance of following due procedures for credit availment. The judgment underscores the significance of adherence to procedural requirements for claiming cenvat credit under the Central Excise Rules 1944, ensuring consistency in decision-making and fair treatment for manufacturers.