2017 (2) TMI 610 - HC - Central Excise

CENVAT credit - fuel used as input in the manufacture of exempted goods - Rule 6 of the CCR, 2001 - Rule 6(1) read with Rule 6(2) of the Cenvat Credit Rules, 2001 - Held that - Since the order passed and impugned in this Appeal is unreasoned and cryptic, we have no alternative but to allow this Appeal. We set aside the Tribunal s order. We restore the Appeal before the Tribunal for a decision afresh on merits - appeal allowed by way of remand.

Summary

Issues:
1. Whether CESTAT was justified in setting aside the order regarding Cenvat Credit on fuel used in the manufacture of exempted goods?
2. Whether CESTAT was justified in overruling the provisions restricting credit on fuel for exempted products?

Analysis:
1. The High Court initially found that the Tribunal's order did not raise substantial questions of law, as it aligned with a Supreme Court judgment. However, Revenue later filed Review Petitions, leading to a different Bench recalling the earlier order due to conflicting Supreme Court judgments. The Appeal was subsequently admitted based on the substantial questions of law raised.

2. The Tribunal's order allowed CENVAT Credit on furnace oil used as fuel for manufacturing exempted and dutiable paper products, citing a settled case law. However, the High Court found ambiguity in whether the Tribunal followed the Vikram Cement case or a subsequent judgment in the Gujrat Narmada Fertilizers case. Due to the lack of clarity in the Tribunal's reasoning, the High Court set aside the order and remanded the matter to the Tribunal for a fresh decision based on the applicable Supreme Court judgment.

3. The High Court directed the Tribunal to decide the matter afresh without being influenced by its previous conclusions. The Appeal was allowed, and the Tribunal was instructed to determine which Supreme Court judgment to follow and decide the issue at hand in accordance with the law. No costs were awarded in this decision.