2013 (10) TMI 265 - AT - Central Excise

CENVAT Credit Waiver of Pre-deposit - inputs (furnace oil) - maintenance of separate records - Revenue was of the view that such credit should be taken only in respect of furnace oil going into the production of dutiable products Held that - Following CCE Vs Gujarat Narmada Valley Fertilizers Co. Ltd. 2012 (12) TMI 437 - SUPREME COURT - the matter stands referred to a Larger Bench of the Apex Court in view of conflicting decisions of the Hon. Apex Court on the issue assessee pleaded that since there is doubt expressed by the Hon. Apex Court itself on the issue, his stay petition should be allowed - it would be proper to waive pre-deposit of dues arising from the order for admission of appeal Stay granted.

Summary

Issues:
Interpretation of Rule 6(2) of Cenvat Credit Rules 2001 and Cenvat Credit Rules 2002 regarding the availing of Cenvat credit on inputs used for manufacturing both dutiable and exempted goods.

Analysis:

The judgment deals with the issue of availing Cenvat credit on inputs, specifically furnace oil, used for manufacturing both dutiable and exempted goods. The applicant, a manufacturer, was utilizing furnace oil for generating electricity, which was then used in the production of both exempted and dutiable goods. The Revenue contended that Cenvat credit should only be taken for the furnace oil used in the production of dutiable products, as per the provisions of Rule 6(2) of the Cenvat Credit Rules. This rule mandates maintaining separate accounts for inputs used in manufacturing dutiable and exempted goods and taking Cenvat credit only on the quantity of inputs intended for dutiable goods.

The judgment highlights conflicting decisions of the Honorable Apex Court on the issue. In one case, the court allowed Cenvat credit on fuels used in exempted goods, while in another case, it disallowed credit on fuel used for exempted goods. The matter was further referred to a Larger Bench of the Honorable Apex Court due to these conflicting decisions. The applicant's advocate argued that since there is doubt expressed by the Apex Court itself, the stay petition should be allowed.

The Revenue, represented by the Ld. AR, relied on the decisions of the Honorable Apex Court, asserting that the assessee is not eligible for credit on fuel used in manufacturing exempted goods. However, considering the conflicting decisions of the Honorable Apex Court and the fact that the matter was referred to a Larger Bench, the judge decided to waive the pre-deposit of dues arising from the impugned order for the admission of appeal. Additionally, a stay was ordered on the collection of such dues during the pendency of the appeal, acknowledging the uncertainty and complexity surrounding the issue.

In conclusion, the judgment addresses the complex issue of availing Cenvat credit on inputs used for manufacturing both dutiable and exempted goods, highlighting the conflicting decisions of the Honorable Apex Court and the need for further clarification on the matter through a reference to a Larger Bench.