2023 (6) TMI 1192 - AT - Central Excise

Excisability - RFG, an intermediate excisable goods - cleared without payment of duty for job work under Rule 4(5)(a) of the CCR for conversion into electricity/steam and return thereof for use in the manufacture of dutiable final products or not - HELD THAT - This Tribunal in the Appellant s own case in HALDIA PETROCHEMICALS LTD. VERSUS COMMISSIONER OF C. EX., HALDIA 2005 (1) TMI 306 - CESTAT, NEW DELHI had dropped the demand of duty on the removal of another intermediate product i.e. CLS cleared to M/s. HPLCL during the period November 2000 to October 2002 under Rule 4(5)(a) of the CCR for generation of steam and electricity which were received back by the Appellant and used in the manufacture of final products. The issue involved in the present case is on the same lines and the only difference is that in the said case the partially processed goods was CLS whereas in the instant case we are concerned with RFG but both RFG and CLS were generated on cracking of Naphtha and were sent to M/s. HPLCL for generation of electricity and steam with an intention to bring back electricity and steam for use in the manufacture of final products. To the same effect is the decision of the Tribunal in Maharashtra Aldehydes Chemicals case 2017 (2) TMI 367 - CESTAT MUMBAI wherein the duty demand on the intermediate product cleared under Rule 4(5)(a) of the CCR was dropped. Since the issue is squarely covered in favour of the Appellant by the decision of the Tribunal in the Appellant s own case, the appeal of the Appellant allowed on merits. Extended period of limitation - HELD THAT - The same also does not survive in view of the communications dated 16 November 1999 15 December 2000 intimating the Jurisdictional Superintendent about clearance, inter alia, of RFG to M/s. HPLCL for job work. Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are duty demand under the proviso to Section 11A, classification of intermediate excisable product, clearance of goods for job work, exemption under Notification No. 214/86, extended period of limitation, and interpretation of Rule 4(5)(a) of the Cenvat Credit Rules.

Duty Demand and Clearance for Job Work:
The case revolved around whether Residual Fuel Gas (RFG), an intermediate excisable good, could be cleared without payment of duty for job work under Rule 4(5)(a) of the Cenvat Credit Rules. The Appellant had removed RFG to a Joint Venture for generation of electricity and steam, which were then returned for use in the manufacture of final products. The Tribunal referred to a previous decision in the Appellant's own case where duty demand on another intermediate product was dropped under similar circumstances. The Tribunal held that the issue was covered in favor of the Appellant, allowing the appeal on merits.

Exemption under Notification No. 214/86:
The Appellant argued that since electricity and steam generated by the job worker were generally exempted, no benefit was claimed under Notification No. 214/86. This exemption was considered in conjunction with the clearance of RFG for job work and the subsequent use in manufacturing final products.

Extended Period of Limitation:
The Appellant contended that the extended period of limitation could not be invoked as the department was informed about the operations at the petrochemical complex, including the clearance of RFG for job work. The Tribunal found that the communications regarding the clearance of RFG negated the need for invoking the extended period of limitation.

Interpretation of Rule 4(5)(a) of Cenvat Credit Rules:
The Appellant argued that RFG could be cleared for job work under Rule 4(5)(a) of the Cenvat Credit Rules as it constituted partially processed inputs. The Tribunal referred to previous decisions and held that the Appellant was entitled to take Cenvat credit on the duty paid on Naphtha sent for generation of steam or electricity, which was then used in the manufacture of final products. The Tribunal set aside the Commissioner's order and granted consequential relief to the Appellant.

Conclusion:
The judgment by the Appellate Tribunal CESTAT Kolkata involved issues related to duty demand, classification of intermediate excisable product, exemption under Notification No. 214/86, extended period of limitation, and interpretation of Rule 4(5)(a) of the Cenvat Credit Rules. The Tribunal ruled in favor of the Appellant, allowing the appeal on the grounds of clearance for job work, exemption, and limitation, based on previous decisions and the communication provided to the department.