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TMI Blog2025 (3) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.' On careful reading of the said relied upon judgment, it is found that the Hon'ble Supreme Court have distinguished the contents in both the Rules i.e. sub-rule (1) and sub-rule (2) of Rule 6 ibid. Since sub-rule (2) of Rule 6 ibid has not dealt with the input i.e., 'fuel', in order to maintain separate records by the assessee, it was held that as per the provisions of sub-rule (1) of Rule 6 ibid, the assessee is required to reverse the CENVAT Credit availed on fuel used in or in relation to manufacture of the exempted goods. It is an admitted fact on record that the appellants had reversed the CENVAT Credit on pro-rata basis in respect of the Furnace Oil used for manufacture of the exempted final product. The appellants have contended that non-reversal of CENVAT Credit, involving the extended period of limitation, was owing to the reason that there was no element of suppression of facts, mis-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of litigation before the Tribunal. In the earlier round of litigation, the impugned order passed by the adjudicating authority was appealed against before the Tribunal, which was disposed of vide order dated 18.07.2006, in allowing the appeals in favour of the appellants. In the said order, it was held that the input 'fuel' should not fall within the scope and ambit of Rule 57CC of the erstwhile Central Excise Rules, 1944 and Rule 6 of the CENVAT Credit Rules, 2001, 2002 & 2004, for the purpose of reversal of CENVAT Credit. The said order of the Tribunal was assailed against by Revenue before the Hon'ble Bombay High Court and vide judgement dated 28.06.2024, the Hon'ble High Court have remanded the matter back to the Tribunal for deciding the issue afresh on the basis of judgement of Hon'ble Supreme Court delivered in the case of Commissioner of Central Excise, Vadodara-II Vs. Gujarat Narmada Valley Fertilizers Co. Ltd. - 2020 (371) E.L.T. 3 (S.C.). 3. When the matter was called out for hearing, Shri Sriram Sridharan appearing for the appellants submitted that as per the judgment delivered by the Hon'ble Supreme Court in the case of Gujarat Narmada Valley Fertilizers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sub-rule (2). In other words, the legal effect of sub-rule (1) has to be applied to all inputs including fuel inputs, only exception being non-fuel inputs, for which one has to maintain separate accounts or in its absence pay 8%/l0% of the total price of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the appellants had reversed the CENVAT Credit on pro-rata basis in respect of the Furnace Oil used for manufacture of the exempted final product. The said fact is evident from the letter dated 24.08.2012 addressed by the appellants to the jurisdictional Central Excise Commissionerate, intimating the reversal particulars of the credit availed in respect of Furnace Oil used in the manufacture of exempted goods. However, it was contended by the learned Advocate that the appellants had not reversed the CENVAT Credit availed by them, in respect of which the proceedings were initiated by the Department beyond the normal period of limitation. The appellants have contended that non-reversal of CENVAT Credit, involving the extended period of limitation, was owing to the reason that there was no element of suppression of facts, mis-statement etc., with intent to evade the government revenue. In this context, learned Advocate appearing submitted that with regard to Rule 57CC ibid and Rule 6 ibid, the issues were highly contentious and there were divergent views expressed by different judicial forums. Thus, he contended that the charges of suppression, mis-statement etc., cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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