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TMI Blog2019 (12) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... exception, namely, inputs intended to be used as fuel. This being the case, the moment it is found that inputs are intended to be used as fuel, such inputs go outside the ken of sub-rule (2) of Rule 6. When this happens, the exception contained in sub-rule (2) does not come into effect at all as a result of which sub-rule (1) must be applied on its own terms. Even after independently applying our minds to Rule 6 as it stood, the interpretation of this Court contained in CCE v. Gujarat Narmada Fertilizers Co. Ltd., [ 2009 (8) TMI 15 - SUPREME COURT] is correct. Appeal allowed - decided in favor of revenue. - CIVIL APPEAL NOS. 4189-4196 OF 2010, SPECIAL LEAVE PETITION (C) NO. 9101 OF 2014 - - - Dated:- 3-12-2019 - JUSTICE ROHINTON FALI NARIMAN, JUSTICE ANIRUDDHA BOSE And JUSTICE V. RAMASUBRAMANIAN JUDGMENT R.F. Nariman, J. 1) This matter has come before us on a reference made by a Division Bench of this Court in Commissioner of Central Excise, Vadodara vs. Gujarat Narmada Valley Fertilizers Company Limited, (2013) 15 SCC 336 as follows:- 15. There is an apparent conflict between GSFCL and Gujarat Narmada. In GSFCL a view has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity of hearing, the Commissioner adjudicated the first show-cause notice by passing an order adverse to the assessee on 24-6-2004. The second show-cause notice was similarly adjudicated and an adverse order passed on 30-8- 2004. By these orders, the Commissioner confirmed the demand of CENVAT credit wrongly claimed by the assessee. The Commissioner also directed the assessee to pay interest on the demanded amount and also imposed personal penalty under Rule 13 of the Rules. Proceedings before the Tribunal 4. Feeling aggrieved, the assessee preferred two appeals before the Customs, Excise Service Tax Appellate Tribunal at Mumbai (hereinafter referred to as the Tribunal ). The appeals were numbered as Appeal Nos. E/2517 of 2004 and E/3672 of 2004. 5. For reasons that are not apparent from the record, both appeals were referred to a larger Bench and heard by the Vice-President and two members of the Tribunal (hereinafter referred to for convenience as the larger Bench ). By an order dated 27-12-2006/4-1-2007 (Gujarat Narmada Valley Fertilizers Co. Ltd. v. CCE, (2007) 208 ELT 342 (Tri), the larger Bench held that the assessee was entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , (supra)] together with the judgment reported in Commissioner of Central Excise, Vadodara vs. Gujarat State Fertilizers and Chemicals Ltd., (2008) 15 SCC 46 as also the two Appellate Tribunal s judgments in Ballarpur Industries Ltd. vs. Collector of Central Excise (2000) 116 ELT 312 (Tri) and Raymond Ltd. vs. Commissioner of Central Excise (2000) 37 RLT 447 (CEGAT) which were expressly approved by this Court in Commissioner of Central Excise, Vadodara vs. Gujarat State Fertilizers and Chemicals Ltd., (2008) 15 SCC 46. The learned Senior Advocate then placed the MODVAT Rules which existed prior to the coming into force of the CENVAT Credit Rules on which these judgments were based and argued that Rule 57A to 57D of the MODVAT Rules were different from Rule 6(1) and (2) of the CENVAT Credit Rules which need to be interpreted in the facts of this case, in that the scheme under the MODVAT Rules dealt with inputs which resulted in intermediate and final products, as opposed to the CENVAT Credit Rules which deals with inputs which finally end up as exempted products, perhaps together with dutiable goods. According to him, the ratio of the two Appellate Tribunal judgments are completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eligibility of credit of duty on certain inputs.- (1) Notwithstanding anything contained in rule 57A, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the following inputs, used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in the final products or not, namely:- (i) inputs which are manufactured and used within the factory of production; (ii) paints; (iii) inputs used as fuel; (iv) inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production; (v) packing materials and materials from which such packing materials are made provided the cost of such packing materials is included in the value of the final product; (vi) accessories of the final product cleared alongwith such final product, the value of which is included in the assessable value of the final product. Explanation.- For the purposes of this sub-rule, it is hereby clarified that the term inputs refers only to such inputs as may be specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the very structure of the CENVAT scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas sub-rule (2) refers to non-fuel inputs. Sub-rule (2) covers a situation where common cenvatted inputs are used in or in relation to manufacture of dutiable final product and exempted final product but the fuel input is excluded from that sub-rule. However, exclusion of fuel input vis-a-vis non-fuel input would still fall in sub-rule (1). As stated above, sub-rule (1) is plenary, hence, it cannot be said that because sub-rule (2) is inapplicable to fuel-input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods. 17. The cumulative reading of sub-rules (1) and (2) makes it abundantly clear that the circumstances specified in sub-rule (2), which inter alia requires separate accounting of inputs, are not applicable to the fuel input(s). However, the said sub-rule (2) nowhere says that the legal effect of sub-rule (1) will stand terminated in respect of fuel inputs which do not fall in subrule (2). In other words, the legal effect of subrule (1) has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n we come to the judgment in Ballarpur Industries Ltd. (supra), the Tribunal was concerned with the interpretation of Rule 57A-D of the Central Excise Rules as they stood prior to 16.03.1995. The bone of contention in this case was that electricity not being excisable goods at all cannot be considered to be an intermediate product for the purpose of exempting from duty final products in which electricity is an intermediate product. The Tribunal held that fuel oils for generation of electricity which is used for manufacture of final products by the assessee is eligible to MODVAT credit in terms of Rule 57A. It can thus be seen that the issue in Ballarpur Industries Ltd. (supra) was different from the issue in the present case, as was Rule 57A-D of the MODVAT Rules being different from Rule 6 of the CENVAT Credit Rules. Equally, the judgment in Raymond Ltd. (supra) concerned itself with Rule 57A, C and D in which it construed the meaning of the expression for any other purpose contained in Rule 57A in para 12. The ratio of this judgment is also therefore far removed from the facts of the present case as the present case does not deal with the expression for any other purpose . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held nonetheless to be used in relation to the manufacturer of the final product. The issue in the present case is whether, given the scheme of Rule 6 of the CENVAT Credit Rules, fuel used as inputs which are covered by Rule 6(1) can at all be said to be within the exception contained in Rule 6(2). 15) This being the case, we are of the view that there is no conflict between the earlier judgment of Commissioner of Central Excise, Vadodara vs. Gujarat State Fertilizers and Chemicals Ltd., (2008) 15 SCC 46 and (2009) 9 SCC 101 [CCE vs. Gujarat Narmada Fertilizers Co. Ltd., (supra). Also, we are of the view that even after independently applying our minds to Rule 6 as it stood, the interpretation of this Court contained in (2009) 9 SCC 101 [CCE v. Gujarat Narmada Fertilizers Co. Ltd., (supra) is correct. 16) As a result, the appeals are allowed and the order dated 10.04.2008 is set aside, except in respect of Appeal Nos. E 87-88/2005 before the Tribunal, where matters have been remanded by the Tribunal on points other that what has been decided by this judgment. 17) Accordingly, Special Leave Petition (C) No. 9101 of 2014 is disposed of in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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