Cenvat credit on fuel for exempt goods denied; later Supreme Court precedent governed the subsequent tax period.

Cenvat credit was held inadmissible on LSHS used as fuel to generate steam for manufacturing exempted fertiliser, because the governing restriction denies credit on inputs used for exempt final products. The Tribunal treated the broader fuel-based input wording as subordinate to that restriction and relied on the Supreme Court's later ruling in GNFC, which clarified that the credit bar applies to all such inputs, including fuel. It also held that an earlier order in the assessee's own case did not prevent reliance on GNFC for a later tax period, since res judicata does not govern successive periods and the later Supreme Court decision supplied the binding legal position.

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Issues: (i) Whether cenvat credit was admissible on LSHS used as fuel for generation of steam, where the steam was used in the manufacture of exempted fertiliser; (ii) whether the earlier decision in the assessee's own case barred the Revenue from applying the later Supreme Court ruling in GNFC for the subsequent period.

Issue (i): Whether cenvat credit was admissible on LSHS used as fuel for generation of steam, where the steam was used in the manufacture of exempted fertiliser.

Analysis: The entitlement to credit had to be tested against the restriction that no credit is available on inputs used in the manufacture of exempted final products. Although the definitions of input and the phrase covering fuel used for generation of steam or electricity were relied upon, the Tribunal held that Rule 57C embodied the controlling restriction. The later Supreme Court decision in GNFC explained that Rule 6(1) is plenary and applies to all inputs, including fuel, so credit is not available where the fuel is used in the manufacture of exempted goods.

Conclusion: Cenvat credit on LSHS used for generation of steam for exempted fertiliser was not admissible.

Issue (ii): Whether the earlier decision in the assessee's own case barred the Revenue from applying the later Supreme Court ruling in GNFC for the subsequent period.

Analysis: The earlier order in the assessee's own case was treated as not laying down a binding ratio on the merits of the legal issue, because it had rested on acceptance of an earlier Tribunal decision. The Tribunal applied the principles governing precedent and held that res judicata does not control later tax periods, while a later decision of the Supreme Court that actually examines the statutory scheme and resolves the legal question on principle constitutes the governing law. GNFC therefore supplied the relevant ratio decidendi and could be applied to the later period.

Conclusion: The earlier decision did not bar application of GNFC, and the Revenue was entitled to rely on the later binding ruling.

Final Conclusion: The appeal failed because the statutory restriction on credit governed fuel used for exempted goods, and the later Supreme Court ruling supplied the binding legal position for the period in dispute.

Ratio Decidendi: A later Supreme Court decision that decides the statutory question on principle prevails as the binding precedent, and credit is not admissible on fuel inputs used in the manufacture of exempted goods where the governing rules deny credit on such inputs.

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