2016 (7) TMI 1026 - AT - Central Excise

Cenvat Credit on Furnace Oil used as fuel and other inputs used in the generation of electricity, which in turn utilized in the manufacture of dutiable goods as well as exempted/non-excisable goods. - Held that - the Department allegation regarding the appellant has not maintained separate accounts for such inputs and hence the appellant has suppressed the facts, has no legal force, as the appellant has not required to maintain separate accounts for such inputs because the same is excluded by the legal provisions during the relevant period,. Therefore, order for imposition of penalty under Section 11AC of the Central Excise Act, 1944 and invocation of extended period under provision to 11A of the Central Excise Act 1944 is also liable for set aside.

Summary

Issues:
1. Cenvat Credit eligibility on input-fuel
2. Limitation period for penalty imposition

Analysis:

Issue 1: Cenvat Credit eligibility on input-fuel
The appeal was filed by the Revenue against the order passed by the Commissioner of Central Excise (Appeals), Rajkot, alleging wrong availment of Cenvat Credit on Furnace Oil used as fuel and other inputs. The Revenue contended that the issue of eligibility of CENVAT Credit on input-fuel was settled by the Hon'ble Supreme Court. The Advocate for the respondents argued that the respondent had succeeded on limitation before the Ld Commissioner (Appeals) due to conflicting decisions at the relevant time. The Tribunal held that the issue on merit favored the Revenue based on the Supreme Court's decision. However, the Advocate for the Respondent successfully argued that no separate accounts were required to be maintained for inputs used as fuel, as they were specifically excluded under the relevant rules. The Tribunal upheld the Ld Commissioner (Appeals) decision in favor of the Respondent on this issue.

Issue 2: Limitation period for penalty imposition
The Ld Commissioner (Appeals) found that the appellant had followed the procedures as per the law and was not liable for any penalty under the Central Excise Laws. The Commissioner also concluded that the extended period of limitation could not be invoked against the appellant as they had not suppressed any facts. The Revenue did not challenge these findings specifically in their grounds of appeal. The Ld AR for the Revenue argued that a larger period of limitation could be invoked as the appellant had not disclosed the use of fuel in the generation of electricity. However, the Ld Advocate for the Respondent pointed out that no separate accounts were required to be maintained for inputs used as fuel. The Tribunal agreed with the Ld Commissioner (Appeals) that the demands for the extended period of limitation and penalty imposed could not be sustained. Therefore, the order of the Ld Commissioner (Appeals) setting aside the demands for the extended period of limitation and penalty was upheld, and the appeal was disposed of accordingly.