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2018 (7) TMI 770 - AT - Central Excise100% EOU - CENVAT credit - furnace oil used in generation of steam, part of which transferred to unit-II - whether CENVAT Credit availed on the furnace oil used in generation of steam, attributable to the portion transferred to unit-II, is admissible to credit at unit-I or otherwise? - Held that - There are conflicting views on the subject on the admissibility of CENVAT Credit availed on furnace oil used in generation of steam in one Unit, when a portion of it transferred to another unit situated in the same plot - However, the ratio laid down in Sintax Industries s case 2013 (6) TMI 178 - GUJARAT HIGH COURT , followed, where it was held that proportionate Cenvat Credit on furnace oil, to the extent wheeled out is not admissible - the appellant are not eligible to proportionate credit availed on furnace oil, attributable to generation of steam, wheeled out to their unit-II, instead of being captively consumed in Unit-I - CENVAT Credit not allowed. Extended period of limitation - Held that - Extended period of limitation cannot be invoked in the present case for the simple reason that there are conflicting views available on the subject and also all the facts have been disclosed by the appellant to the department through their ER-2 Returns filed with the department. Appeal allowed - decided in favor of appellant.
Issues:
- Interpretation of CENVAT Credit rules for furnace oil used in steam generation and transferred to another unit on the same plot. - Applicability of extended period of limitation in the case. - Conflict between judgments on admissibility of credit on transferred steam. Interpretation of CENVAT Credit Rules: The appeal involved the interpretation of CENVAT Credit rules regarding the utilization of furnace oil for steam generation in one unit and its transfer to another unit on the same plot. The appellant, a 100% EOU, argued that since both units were on the same premises, the transferred steam should be considered as used within the factory of production, making the credit admissible. They cited judgments supporting their stance, including the Hon’ble Karnataka High Court's decision in a similar case. However, the Revenue relied on a judgment by the Hon’ble Gujarat High Court in a different case, stating that separate registration of units on the same premises makes them distinct factories. The Tribunal analyzed these arguments and upheld the view that proportionate credit on furnace oil used for steam generation, wheeled out to another unit, is not admissible. Applicability of Extended Period of Limitation: The appellant contended that the extended period of limitation should not apply due to conflicting views on the subject and the disclosure of all facts through their ER-2 Returns. They referenced the Hon’ble Gujarat High Court's judgment to support their argument. The Tribunal agreed with the appellant, setting aside the invocation of the extended period of limitation based on the conflicting views and the appellant's compliance with disclosure requirements. Conflict Between Judgments: The judgment highlighted conflicting views on the admissibility of CENVAT Credit for steam transferred between units on the same plot. While the appellant relied on the Hon’ble Karnataka High Court's decision for their case, the Revenue referred to the Hon’ble Gujarat High Court's judgment. Despite the conflicting views, the Tribunal followed the precedent set by the jurisdictional High Court, ultimately ruling against the appellant's claim for proportionate credit on furnace oil used for steam generation and transferred to another unit. The Tribunal emphasized the binding nature of the jurisdictional High Court's judgment in such matters. In conclusion, the Tribunal's decision clarified the interpretation of CENVAT Credit rules in the context of steam transfer between units on the same plot, addressed the applicability of the extended period of limitation, and resolved the conflict between different judgments on the admissibility of credit in such scenarios.
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