CENVAT credit and exempt clearances of blast furnace gas: demand for 8% recovery was held unsustainable.

Blast furnace gas cleared without payment of duty under an exemption notification was the subject of the dispute while the assessee was availing CENVAT credit. The Revenue sought to recover an amount equal to 8% of the value of the clearances under Rule 57AD of the Central Excise Rules, 1944 and Rule 6 of the Cenvat Credit Rules, 2002. CESTAT followed its earlier decision in the assessee's own case and the Supreme Court ratio relied on there, and held that the identical demand was not sustainable. The lower appellate authority's order setting aside the demand was affirmed, and the connected cross-objection was disposed of.

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Issues: Whether an amount equal to 8% of the value of blast furnace gas cleared without payment of duty was recoverable when the assessee was availing CENVAT credit.

Analysis: The dispute concerned clearance of blast furnace gas generated in the course of manufacture and supplied without payment of duty under an exemption notification. The demand had been raised on the footing of Rule 57AD of the Central Excise Rules, 1944 and Rule 6 of the Cenvat Credit Rules, 2002. The Tribunal followed its earlier decision in the assessee's own case and the ratio of the Supreme Court decision relied upon therein, under which the identical demand had not been sustained.

Conclusion: The demand was not sustainable and the Revenue's appeal failed.

Final Conclusion: The order of the lower appellate authority setting aside the demand stood affirmed, and the connected cross-objection was also disposed of.

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