2025 (3) TMI 4

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..... eld that 'It has been rightly held by Learned Commissioner (Appeals) that removal of fuel and oil is the initiation of ship breaking activity and cannot be said as separate activity.' Conclusion - The Cenvat Credit on the oil brought in the ship engine when used for ship breaking purposes to the extent of 85%. Appeal allowed.
HON'BLE MR. SOMESH ARORA , MEMBER ( JUDICIAL ) Shri. Rahul Gajera , Advocate for the Appellant Shri. Rajesh R Kurup , Superintendent ( AR ) for the Respondent ORDER In the present case, the dispute is about Cenvat Credit availed or allowed to be availed on fuel oil in engine parts of the vessel brought for breaking purposes. The stand of the department is that the appellants are not entitled to .....

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..... the rival submissions. It finds that sufficient mind was applied by the Division Bench of this Tribunal in the decision of Navyug Ship Breaking Company (cited supra) (in para-5 as reproduced below) and therefore deserves to be followed: Para "05. We have carefully considered the rival submissions and perused the records. It can be seen that obtaining of goods and material by process of breaking ship is deemed as manufacturing activity liable to central excise duty as per section note 9 of section XV of Central Excise Tariff Act, 1985 which reads as under: "in relation to the products of this section, the process of obtaining goods and material by breaking up of ships, boats and floating structure shall amount to 'manufacture Sec .....

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..... ing the activity of breaking the ship and if that be so, there is no reason for denial of cenvat credit of CVD paid on any part of the Ship including its stores viz. fuel and oil on the ground that they do not form part and parcel of the ship or that they are removed at a stage before commencing the activity of breaking ship or that their classification is under different heading. It is settled law that in the course of manufacturing activity any by-product emerges; cenvat credit on that part which pertains to by-product cannot be denied on the ground that such by-products are non-excisable goods or that they are not used in or in relation to manufacturing activity of manufacturer of excisable goods. This was made clear by para 3.7 of CBEC .....

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