Custom, Excise & Service Tax Tribunal
Cce, Delhi-Iv, Faridabad vs M/S. Namo Alloys (P) Ltd on 27 July, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT III CENTRAL EXCISE APPEAL NO. 2270 OF 2007-SM [Arising out of Order-in-Appeal No. 41/CE/Appl/DLH-IV/2007 dated 13.4.2007 passed by the Commissioner (Appeals), Central Excise, Delhi-I, Faridabad] For approval and signature: Honble Mr. P.K. Das, Member (Judicial) 1. Whether Press Reporters may be allowed to see the order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy of the order? 4. Whether order is to be circulated to the Departmental authorities? CCE, Delhi-IV, Faridabad Appellant Vs. M/s. Namo Alloys (P) Ltd. Respondents
Appearance:
Shri S. Gautam, D.R. for the Revenue;
Dr. Yuvraj Shekhar Kumar, Advocate Coram:
Honble Mr. P.K. Das, Member (Judicial), Date of hearing/decision: 27th July, 2009 FINAL ORDER NO._________________ dated __________ Per P.K. Das:
Relevant facts of the case, in brief, are that the respondents are engaged in the manufacture of Aluminium Ingots classifiable under heading 7601.10 of the Schedule to the Central Excise Tariff Act, 1985. They availed Cenvat credit on Furnace Oil used in the manufacture of their own material as well as on job work basis. The job work materials were cleared at nil rate of duty under Notification No. 214/86-CE dated 1.3.86 as amended from time to time. It has been alleged that the respondents have not reversed the proportional Cenvat credit of Rs. 26,911/- in respect of input Furnace Oil used in the manufacture of job work material. Original authority confirmed the demand of Rs. 26,911/- and imposed penalty of equal amount along with interest. Commissioner (Appeals) set aside the adjudication order.
2. Learned D.R. on behalf of the Revenue reiterates the grounds of appeal. He submits that the Commissioner (Appeals) erroneously held that Rule 6(1) & (2) of Cenvat Credit Rules would not apply to the input fuel. He submits that Sub-rule (1) & (2) of Rule 6 of Cenvat Credit Rules would apply in respect of any inputs except inputs intended to be used as fuel and input services and the manufacture of both dutiable and exempted goods. It is his contention that on reading of Sub-rule (2) of Rule 6 it is clear that the said Sub-rule is not applicable to the inputs intended to be used as fuel.
3. Learned Advocate on behalf of the respondents reiterates the findings of the Commissioner (Appeals). He submits that the issue has already been covered by the following decisions of the Tribunal:-
(a) CCE vs. Sudarshanam Spiing Mills 2004 (166) ELT 461 (Tri. Chennai);
(b) Ballarpur Industries Ltd. vs. CCE, Napur 2006 (199) ELT 433 (Tri. Mumbai)
4. After hearing both the sides and on perusal of the records, for the purpose of proper appreciation of the case the relevant portion of the Rule is reproduced below:-
RULE 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in sub-rule (2).
[Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.] (2) Where a manufacturer or provider of out put service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable.
5. I agree with the findings of the Commissioner (Appeals) that on reading of Sub-rules it is clear that inputs intended to be used as fuel would not covered under the provision of Rule 6(1) and (2) of the said rule. The words except input intended to be used as fuel in sub-rule (2) of Rule 6 make it clear that there is no requirement to maintain separate account and reversal of credit in respect of fuel. The Division Bench of the Tribunal in the case of Balarpur Industries Ltd. (supra) held as under:-
A perusal of the above indicates that provisions restricted use of other inputs & not fuel. Therefore furnace oil used as fuel in part of the goods manufactured are exempted from the rigors of the rules. Credit would not be restricted and or required to be reversed in case of fuel. Decisions of this Tribunal under the erstwhile Modvat rules will not be applicable, for fuel, as held in National Engineering Ind. Ltd. 2002 (147) ELT 611, CCE v. Indore Steel & Iron Mills Ltd. 2003 (59) RLT 409, CCE v. Super Auto (I) Ltd. 2004 (61) RLT 750, CCE v. Sudarsanam Spinning Mills 2004 (166) E.L.T. 461 (Tribunal) = 2004 (62) RLT 70, Hindustan Zinc v. CCE 2004 (117) ECR 599. Since there is no finding that furnace oil was not used as fuel, the objection to the eligibility to credit and subsequent recovery at 8% cannot be upheld in this case.
6. In view of the above discussion, I do not find any reason to interfere with the order of the Commissioner (Appeals). Accordingly, appeal filed by the Revenue is rejected.
(Dictated & pronounced in the Open Court.) (P.K. DAS) MEMBER (JUDICIAL) RK