2020 (11) TMI 238 - AT - Central Excise

CENVAT Credit - credit on FFC MTOP - CBEC Instruction F.No. 06/03/2013/CX.1 dated 10.11.2014 - HELD THAT - The Hon ble High Court in M/S. INOX AIR PRODUCTS PVT. LTD. (PREVIOUSLY, M/S. INOX AIR PRODUCTS LTD.) VERSUS UNION OF INDIA, COMMISSIONER OF CENTRAL EXCISE, M/S. STEEL AUTHORITY OF INDIA LIMITED 2020 (8) TMI 225 - MADRAS HIGH COURT has considered the disallowance of credit on MTOP FFC charges and held that the appellant herein has to be allowed to avail the Cenvat credit of MTOP FFC charges. Further, it has to be noted that the appellant has paid Central Excise duty on these charges and therefore, the department cannot deny the credit availed after collecting the excise duty - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat credit on MTOP charges and FFC.
2. Interpretation of CBEC Instruction F.No. 06/03/2013/CX.1 dated 10.11.2014.
3. Disallowance of credit on MTOP & FFC charges.

Issue 1: Eligibility of Cenvat credit on MTOP charges and FFC:
The appellant, a steel products manufacturer, entered into an agreement with Inox Air Products Ltd. for gases supply, including MTOP charges and FFC. The department alleged wrong availment of credit on these charges, leading to a Show Cause Notice and subsequent denial of Cenvat credit. The matter went through adjudication, remand, and re-adjudication, resulting in denial of credit. The appellant argued citing a High Court case favoring them, emphasizing the payment of excise duty on MTOP & FFC, making the credit denial unjustified. The Tribunal, considering the High Court's decision, allowed the appeal, stating that the appellant should be allowed to avail Cenvat credit on MTOP & FFC charges.

Issue 2: Interpretation of CBEC Instruction F.No. 06/03/2013/CX.1 dated 10.11.2014:
The appellant relied on a CBEC Instruction and a High Court decision to support their claim for Cenvat credit on MTOP & FFC charges. The High Court's interpretation of the CBEC Instruction highlighted that the department should allow the credit as excise duty was paid on these charges. The Tribunal concurred with this interpretation, emphasizing that once excise duty is paid, credit cannot be denied.

Issue 3: Disallowance of credit on MTOP & FFC charges:
The High Court's observation in a related case emphasized that the appellant should be allowed to avail Cenvat credit on MTOP & FFC charges, as excise duty was paid on these charges. The Tribunal noted that the appellant had discharged excise duty on these charges, making the denial of credit unsustainable. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with appropriate reliefs as per the law.

This detailed analysis of the judgment highlights the issues of eligibility of Cenvat credit on MTOP charges and FFC, the interpretation of relevant instructions, and the disallowance of credit, culminating in the Tribunal's decision to allow the appellant to avail the credit based on the payment of excise duty on these charges.