2005 (6) TMI 140 - AT - Central Excise

Summary

Issues involved: Credit availed on furnace oil for generating electricity, reversal of credit for electricity transferred, rejection of refund claim on grounds of limitation.

Summary:
The Appellants operate a power plant in Bharuch where they avail credit on furnace oil to generate electricity, which is then transferred to another unit in Vadodara. The credit of furnace oil used in proportion to the electricity transferred to Vadodara is being reversed. A refund claim was filed for the period March 2000 to January 2001 with the jurisdictional Assistant Commissioner in Vadodara, but it was returned and eventually rejected on grounds of limitation. The appeal to the CCE (A) was also rejected solely on the basis of limitation, leading to the current appeal.

In the judgment, it was noted that reversals of debit entries, whether uncalled for or made in excess, are not covered by Section 11B. The appeal was to be allowed based on previous decisions such as Vishakhapatnam Steel Plant and United Phosphorus. Rule 6 of Cenvat Credit Rules allows for the availment of credit for inputs used as fuel, and no reversal was required if the fuel was used for non-duty paid or non-excisable goods. Correcting such reversals required an accounting entry of a corresponding credit entry with a cross-reference to maintain accurate accounts. The appellants were advised to correct the books suo motu after informing the jurisdictional officer, as per the Tribunal's decision in Vishakhapatnam Steel.

Ultimately, the appeal was allowed and disposed of accordingly, emphasizing the correction of accounting entries without the need for refund applications.