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TMI Blog2014 (7) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... activity was undertaken within the refinery, which was deemed as a warehouse. Following the ratio of the said decision, in the present case also it has to be held that the demand for the period prior to 1-7-2001 in respect of BHGO and naphtha used within the refinery for the manufacture of electricity, which was further used in the manufacture of goods dutiable or otherwise will not sustain in law. If the appellant has undertaken the credit reversal as claimed by them, benefit of Notification No. 67/95 cannot be denied to the appellant provided the reversal has been correctly done and whenever there is a delay in reversal, interest liability has been discharged on the quantum of credit reversed from the due date to reversal till the actual date of reversal. Finance Act, 2010 retrospectively amended the Cenvat Credit Rules as it stood at various points of time so as to provide for reversal of credit attributable to inputs used in the manufacture of exempted final products subject to the appellant reversing the credit and the credit so reversed is certified by a Chartered Accountant/Cost Accountant and interest liability is discharged at the rate of 24% per annum for the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,34,77,985 98,00,524 April 2002 - March 2004 57,65,031 46,15,664 0 0 October 2003 - September 2006 6,50,41,332 57,98,034 6,66,26,367 52,09,855 E/314/08 October 2006 - March 2007 2,76,39,210 12,85,463 1,29,30,673 6,20,606 E/1047/08 October 2007 - March 2008 1,84,92,358 12,10,782 1,74,79,336 11,19,130 E/1107/09 April 2008 - September 2008 1,78,72,658 19,26,155 2,46,98,724 28,81,172 E/665/11 October 2008 - September 2009 3,87,44,662 35,27,101 1,80,09,715 16,82,993 E/1067/11 October 2009 - August 2010 0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic Distribution Scheme (PDS). The electricity generated in captive power plant was used within the factory premises for manufacture of both dutiable as well as exempted goods as mentioned above. The department was of the view that BHGO and naphtha which emerged during the course of distillation of crude and are consumed in the captive power plant for generation of electricity are liable to excise duty, when such goods are used in the manufacture of exempted final products or in the administrative and canteen building located within the factory premises. Accordingly, show cause notices were issued demanding excise duty on BHGO and naphtha used in the captive power plant for generation of electricity, which in turn has been used in the manufacture of exempted final products and also have used in the administrative/canteen building of the appellant. These notices were adjudicated and duty demands were confirmed along with interest thereon and also by imposing penalties. Aggrieved of the same, the appellant is before us. 3. The learned Counsel for the appellant makes the following submissions :- (i) BHGO is not a finished product but is an intermediate product, which is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Notification No. 67/95-C.E. as amended by Notification No. 35/2001-C.E. read with Rule 6 of the Cenvat Credit Rules, 2001/2002/2004 as they stood at the relevant time. It is the contention that the appellant have taken Cenvat credit on inputs exclusively used in the manufacture of dutiable finished product. As regards the three exempted products mentioned above, there is only one input namely, Mercaptan which is used exclusively in the manufacture of LPG and no credit was taken by the appellant on Mercaptan during the period in question. There is no input exclusively used in the manufacture of SKO and Naphtha. There are a few common inputs which are used in the manufacture of dutiable final products and exempted goods namely, LPG, SKO and Naphtha, such as Actuma Ultra 40-Barrel, Mak Spiro EP 90-Barrel, Hydrol 15-Barrel, Hydrol 320-Barrel, Turbol EP 32-Barrel, Mak Turbol 46-Barrel, Acetylene, Argon Gas, Nitrogen, Combustion Promoter, CYL Hydrogen, Oxygen Gas, Anti-oxidant, Demulsifier, Di-Ethanol Amine, Hydrochloric Acid, Metal Passivator, Lubricity Additive, Caustic Soda, Ammonia Gas, etc. (iv) The appellants have not taken Cenvat credit attributable to the inputs used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the manufacture of exempted goods, the provisions of Rule 6 has been complied with. With effect from 1-4-2008 onwards the appellants have followed the procedure under Rule 6(3)(ii) read with Rule 6(3A) and, therefore, the question of any demand in this regard would not arise. Since naphtha is used captively in the manufacture of exempted products mentioned above, the benefit of exemption under Notification No. 67/95-C.E. would apply. Reliance is place on the decision of this Tribunal in the case of Hindustan Petroleum Corporation Ltd. - 2013 (287) E.L.T. 102 (T) and Final Order No. A/956/2013/EB/C-II, dated 17-10-2013. (vi) Since the administrative building and canteen are located within the premises of the refinery, electricity used therein have to be treated as used in relation to manufacture of the petroleum products. The submissions made above would apply in respect of such use also. It is further submitted that if it is held that duty is payable on BHGO and naphtha used in the generation of electricity, which in turn has been used in the administrative building, canteen etc., the appellant would be eligible for credit of the duty. Reliance is placed on a number of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner s Dictionary, 7th Edition, which refers to Gas Oil as a type of oil obtained from petroleum which is used as fuel. From the web link of New Era Nationwide Fuels and Lubricants, which is UK s leading Gas Oil Prices and Red Diesel Supplier, Gas Oil is mentioned as a marketable product, which is supplied internationally for use as fuel. Reliance is also placed on the Encyclopedia Britannica, which refers to Gas Oil as a type of petroleum that chemically occurs in association with crude oil. From these documents, it is evident that BHGO is a manufactured product and is a marketable product. Therefore, the contention of the appellant that BHGO is not an excisable product is not sustainable. He also placed reliance on the decision of the Tribunal in the case of Andhra Pradesh State Electricity Board - 1994 (70) E.L.T. 3 (S.C.), wherein this Tribunal held that marketability is a question of fact to be decided in the facts of each case. The fact that the goods are not in fact marketed is of no relevance. So long as the goods are marketable, they are goods for the purpose of Section 3. It is not also necessary that the goods in question should be generally available in the market. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (Tri.-Chen.), it was held that LSHS captively consumed in the generation of electricity, which was supplied to State Electricity Board would be liable to duty. Reliance is also placed on the decision of this Tribunal in the case of Spentex Industries Ltd. v. CCE, Indore - 2010 (253) E.L.T. 225 (Tri.-Del.), wherein it was held that availment of Cenvat credit and reversal thereof subsequent to clearance of the goods would amount to utilization of Cenvat credit prior to reversal. In the present case, the appellant had reversed the credit on inputs attributable to production of exempted final products on 23-2-2006 for the period from 2002-03 to 23-2-2006. Such reversal made after the clearance would amount to utilization of credit and, therefore, the benefit of Notification No. 67/95 would not be available in respect of naphtha and BHGO used in the manufacture of exempted final products. In the light of the above, it is submitted that the impugned demands are sustainable in law and accordingly, requires to be upheld. 5. We have carefully considered the submissions made by both sides. 5.1 As regards the demand of duty on BHGO and naphtha for the period prior to 1-7-2001, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 67/95 cannot be denied to the appellant provided the reversal has been correctly done and whenever there is a delay in reversal, interest liability has been discharged on the quantum of credit reversed from the due date to reversal till the actual date of reversal. Finance Act, 2010 retrospectively amended the Cenvat Credit Rules as it stood at various points of time so as to provide for reversal of credit attributable to inputs used in the manufacture of exempted final products subject to the appellant reversing the credit and the credit so reversed is certified by a Chartered Accountant/Cost Accountant and interest liability is discharged at the rate of 24% per annum for the period of delay in reversal. In the present case also, the benefit of this retrospective amendment ought to be given to the appellant, if these conditions are complied with. However, this is a matter of verification which has to be undertaken by the adjudicating authority and the appellant has to lead the necessary evidence that they have discharged the credit liability as provided for under the Finance Act, 2010 along with appropriate interest liability. Subject to submission of such evidence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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