2010 (4) TMI 416 - AT - Central Excise

Cenvat- Refund- The relevant facts that arise for consideration are that the appellant herein is a 100% EOU. The appellant submitted a refund claim of Rs. 89,164/- being duty paid on High Speed Diesel Oil (HSD oil) used for generation of power for manufacture of granite tiles for export. The said refund application was scrutinized by the Asst. Commissioner, Tirupati Division and granted a refund of Rs. 71,298/- and disallowed refund of Rs. 17,866/-. Aggrieved by such an order of allowing refund of Rs. 71,298/-, Revenue filed an appeal before the ld. Commissioner (Appeals) Ld Commissioner (Appeals), after considering the submissions made by both sides and also considering the memorandum of cross- objection filed by the assessee, set aside the Order-in-Original which granted the refund. Aggrieved by such an order, the appellant is before the Tribunal. Held that- Explanation-1 clearly says HSD oil as being not treated as an input for any purpose whatsoever. Credit of the duty paid on HSD oil excluded. HSD oil may not be considered as input even as a fuel. Refund of credit of duty paid on HSD oil not correct.

Summary

Issues:
- Eligibility for refund of duty paid on HSD oil used for manufacturing granite tiles in an EOU.

Analysis:
1. The appellant, a 100% EOU, claimed a refund of duty paid on High Speed Diesel Oil (HSD oil) used for generating power for manufacturing granite tiles for export. The Asst. Commissioner granted a partial refund, which was challenged by the Revenue leading to an appeal before the ld. Commissioner (Appeals) who set aside the refund. The appellant then approached the Tribunal, disputing the disallowance of the refund amount.

2. The appellant's counsel argued that the HSD oil was used as fuel within the factory for manufacturing goods for export, making them eligible for Cenvat credit. Referring to the Cenvat Credit Rules, 2004, and relevant CBEC circulars, the counsel cited precedents where refunds were granted for unutilizable credits by EOUs. Additionally, the counsel highlighted a High Court decision supporting a similar refund claim.

3. The Revenue's representative contended that the definition of inputs under the Cenvat Credit Rules excludes HSD oil, supporting the findings of the ld. Commissioner (Appeals) disallowing the refund.

4. The Tribunal analyzed the eligibility of the appellant for the refund based on the definition of inputs as per the Cenvat Credit Rules. The relevant definition excluded HSD oil from the category of inputs, despite being used as fuel. The Tribunal noted that the exclusion of HSD oil as an input was clear in the definition, precluding any refund claims based on its usage.

5. While acknowledging the appellant's arguments and cited precedents, the Tribunal distinguished the facts of those cases from the present situation. The Tribunal emphasized that the exclusion of HSD oil as an input under the Rules was unambiguous, leading to the rejection of the appellant's appeal.

6. Ultimately, the Tribunal upheld the impugned order, finding it legally sound and free from any defects. Consequently, the appeal filed by the appellant was dismissed, affirming the disallowance of the refund claim on duty paid on HSD oil used in manufacturing granite tiles for export.