2019 (3) TMI 973 - AT - Central Excise

Restriction of CENVAT Credit - N/N. 14/97-CE(NT) dated 03.05.1997 - Restriction on credit in respect of LSHS - case of respondent is that the notification restricts the credit in respect of LSHS to the extent of 10% however the impugned order allows the cenvat credit of entire 15% to the respondent - Held that - Notification 14/97-CE (NT) amends Notification 5/94-CE(NT) by introducing a proviso which restricts the availability of credit on certain fuel oils like LSHS to 10% ad valorum - In the present case it is not disputed that the item under dispute i.e. Gas Oil is also LSHS - In the present case, the respondent had voluntarily paid duty on the Gas oil consumed captively for generation of electricity. In terms of the decision of Hon ble Apex Court in case of Indian Oil Corporation Ltd. (supra), the appellants were not liable to pay duty on the said material consumed captively. The respondent had paid duty on such captive clearances. The said payment of duty by the respondent was not disputed by them and consequently the said assessment has attained finality. Whether the appellant are entitled to take credit of the entire duty of 15% paid by them as credit when Notification No. 14/1997-CE (NT) restricts the same to 10%? - Held that - In the plain and simple language of the notification and law, it is clear that the credit is restricted to 10%. Ld. Counsel has sought to invoke the reasons behind restricting the credit to 10% as enumerated in the trade notice number 56/1997-(S). It is seen that the notification 14/97-CE(NT) does not specify the intention behind the same. It merely restricts the credit to 10% - it cannot be held that the appellants are entitled to credit @ 15%, the plain and simple language of the Notification does not allow any scope of any interpretation. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Entitlement to Cenvat credit of Gas Oil under Notification No. 14/97-CE(NT).
2. Applicability of the restriction on credit to 10% for Low Sulphur Heavy Stock (LSHS) under Notification No. 14/97-CE(NT).
3. Interpretation of legislative intent behind Notification No. 14/97-CE(NT).
4. Relevance of previous judicial decisions on similar matters.

Detailed Analysis:

1. Entitlement to Cenvat Credit of Gas Oil under Notification No. 14/97-CE(NT):
The primary issue revolves around whether M/s. Indian Oil Corporation Ltd. (IOCL) is entitled to avail Cenvat credit of the entire 15% duty paid on Gas Oil, considering the restriction imposed by Notification No. 14/97-CE(NT) dated 03.05.1997. The Revenue argued that the notification restricts the credit to 10% for LSHS, and since Gas Oil is essentially LSHS, the restriction applies. The respondent contended that they used Gas Oil for electricity generation and had paid duty voluntarily, thus seeking credit for the duty paid.

2. Applicability of the Restriction on Credit to 10% for LSHS under Notification No. 14/97-CE(NT):
The Revenue's position was that the notification explicitly restricts the credit to 10% for LSHS, which includes Gas Oil. The respondent argued that the duty was paid on Gas Oil used for generating electricity, which should entitle them to the full credit of 15%. The Tribunal noted that the notification's plain language restricts the credit to 10%, and no authority has the discretion to override this restriction.

3. Interpretation of Legislative Intent Behind Notification No. 14/97-CE(NT):
The Tribunal examined the legislative intent behind the notification, as explained in Trade Notice No. 56/1997 issued by the Central Excise Commissionerate, Vadodara. The notice clarified that the duty on certain petroleum products was increased from 10% to 15%, but the increase could not be passed on to consumers and had to be absorbed by public sector refineries. Consequently, buyers of these goods could only claim credit for the 10% duty they bore, not the full 15%.

4. Relevance of Previous Judicial Decisions on Similar Matters:
The respondent cited previous decisions, including those of the Hon'ble Supreme Court and the Tribunal, which had allowed full credit in similar circumstances. However, the Tribunal distinguished these cases based on the facts. In the present case, the duty liability on Gas Oil was not challenged, and the assessment had attained finality. The Tribunal also noted that the decision in Gujarat State Fertilizers and Chemicals Ltd. (2014) and Gujarat Paraffins Pvt. Ltd. (2012) were based on different facts and were not applicable to the instant case.

Conclusion:
The Tribunal concluded that the plain language of Notification No. 14/97-CE(NT) restricts the credit to 10%, and there is no scope for interpretation beyond this. The appeal by the Revenue was upheld, and the respondent's entitlement to credit was restricted to 10% as per the notification.

Final Order:
The appeal was dismissed, and the cross-objection was disposed of accordingly. The Tribunal emphasized that the plain and simple language of the notification must be given effect, and no additional interpretation is warranted.