Cenvat credit on fuel for steam generation rejected where inputs supported manufacture of exempted goods under Rule 6

Cenvat credit on LSHS used as fuel for generating steam for exempted fertiliser was treated as inadmissible because the restriction in Rule 6 applied to inputs used in exempted final products, including fuel inputs. The analysis also notes that an earlier decision in the assessee's own case was not a binding ratio on the statutory question, as it had followed an unchallenged case without independently examining the governing provisions. It further states that res judicata does not apply across different tax periods, so the later Supreme Court ruling on the same legal issue governed the credit claim.

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Issues: Whether Cenvat credit was admissible on LSHS used as fuel for generating steam, which was in turn used in the manufacture of exempted fertiliser, and whether the earlier decision in the assessee's own case barred application of the later Supreme Court ruling on the same legal question.

Analysis: The Tribunal held that the earlier decision in the assessee's own case did not lay down a binding ratio on the statutory issue because it was rendered by following an unappealed decision in another case and did not independently examine the governing provisions in detail. It further held that res judicata does not govern tax disputes for different periods, and that the later Supreme Court decision considering the effect of Rule 6 treated the prohibition on credit for inputs used in exempted goods as applicable even to fuel inputs. On that reasoning, the words allowing credit for inputs used as fuel for steam or electricity could not override the restriction against credit for inputs used in exempted final products.

Conclusion: Cenvat credit on the LSHS used for generating steam in the manufacture of exempted goods was not admissible, and the appeal failed.

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