2013 (6) TMI 631 - AT - Central Excise

Cenvat Credit - Extra low Sulphur oil - whether ELS is different from the HSD - Held that - Commissioner (Appeals) came to the conclusion that ELS-HSD is substitute for the HSD and not altogether a different commodity as it has the same use as of the HSD. He rejected the contentions of the appellant that ELS is totally different from HSD holding that ELS is not eligible for purpose of modvat credit. We find that there is no doubt about the fact that low sulphur diesel is environmentally cleaner than the HSD but there is no reason to say that it is totally different from the HSD. Since the HSD is excluded from the purview of modvat credit eligibility, there is no reason to allow the modvat credit on Low Sulphur HSD. - Decided against the assessee.

Summary

Issues:
1. Eligibility of modvat credit on Extra Low Sulphur oil.
2. Charging of interest on modvat credit.
3. Imposition of penalty on the assessee.

Detailed Analysis:
1. The appeal was filed by M/s. GSL (India) Limited challenging the order denying modvat credit on Extra Low Sulphur oil (ELS). The Commissioner (Appeals) previously allowed the appeal, stating that ELS is not High Speed Diesel (HSD) and is eligible for modvat credit. The department appealed to the Tribunal, which remanded the matter back to the Commissioner (Appeals) for de-novo proceedings. The issue revolved around whether ELS is different from HSD for modvat credit eligibility. The Commissioner (Appeals) considered industry meeting minutes and concluded that ELS-HSD is a substitute for HSD and not a different commodity, thus not eligible for modvat credit. The Tribunal upheld this decision, emphasizing that even though ELS is cleaner, it is not entirely different from HSD, making it ineligible for modvat credit.

2. The Revenue challenged the order regarding the non-charging of interest on the denied modvat credit and the dropping of the penalty by the Commissioner (Appeals). The Tribunal ruled that interest is chargeable on the denied modvat credit, supporting the Revenue's appeal in this regard. However, the penalty imposed by the Commissioner (Appeals) was set aside due to the absence of a timely show cause notice and lack of allegations of suppression of facts or willful misstatement. The Tribunal upheld the decision to waive the penalty, stating that there was no reason to interfere with this aspect of the Commissioner (Appeals) order.

3. In conclusion, the Tribunal upheld the decision that ELS is not eligible for modvat credit as it is considered a substitute for HSD. The Revenue's appeal regarding the charging of interest on the denied modvat credit was allowed, while the appeal concerning the penalty imposition was rejected. The Tribunal disposed of the appeals accordingly, maintaining the rulings on modvat credit eligibility, interest, and penalty imposition.