2012 (9) TMI 309 - AT - Central Excise

Tribunal dismisses appeal citing GNFC case, rules against appellant on CENVAT credit for LSHS use.

M/s. GSFC Ltd. Versus CCE Vadodara

M/s. GSFC Ltd. Versus CCE Vadodara - 2014 (312) E.L.T. 139 (Tri. - Ahmd.) Issues Involved:1. Eligibility for CENVAT credit on Low Sulphur Heavy Stock (LSHS) used as fuel in the generation of steam for the manufacture of exempted fertilizer.2. Applicability of the principle of res judicata.3. Interpretation of Rule 6 of the CENVAT Credit Rules and its impact on the eligibility of CENVAT credit.4. Binding nature of Supreme Court decisions on lower authorities.Detailed Analysis:1. Eligibility for CENVAT Credit on LSHS:The primary issue in this case was whether the appellant was eligible for CENVAT credit on LSHS used as fuel in generating steam, which was subsequently used in the manufacture of exempted fertilizer. The appellant had previously received a favorable decision from the Tribunal, upheld by the Supreme Court, for the period from September 1997 to January 1998. However, the Commissioner, in the impugned order, denied the credit for subsequent periods, citing a later Supreme Court decision in the case of Gujarat Narmada Fertilisers Ltd. (GNFC), which held that LSHS used in the manufacture of steam for exempted products was not eligible for CENVAT credit under Rule 6 of the CENVAT Credit Rules.2. Principle of Res Judicata:The appellant argued that the principle of res judicata should apply, meaning the earlier Supreme Court decision in their favor should bind the current proceedings. They contended that the Commissioner could not ignore the decision in their own case in preference for another party's case. The appellant relied on several decisions, including J.K. Charitable Trust, to argue that a decision in their own case should be binding.3. Interpretation of Rule 6 of the CENVAT Credit Rules:The Tribunal examined whether the definition of 'input' under Rule 57B(iv) and Rule 57AB, which allowed credit for inputs used as fuel or for generating steam or electricity, would prevail over Rule 57C, which disallowed credit for inputs used in the manufacture of exempted final products. The Tribunal noted that the Supreme Court in the GNFC case had clarified that Rule 6(1) was plenary and applied to all inputs, including fuel, thereby disallowing credit for fuel used in the manufacture of exempted goods.4. Binding Nature of Supreme Court Decisions:The Tribunal considered the binding nature of Supreme Court decisions and the principle of judicial discipline. The Tribunal noted that the Supreme Court's decision in the GNFC case, which was subsequent to the decision in the appellant's case, had examined the relevant provisions of law in detail and provided a clear ratio decidendi. Therefore, the Tribunal held that the decision in the GNFC case should prevail over the earlier decision in the appellant's case, as it laid down the law more comprehensively.Conclusion:The Tribunal rejected the appellant's appeal, holding that the decision in the GNFC case was binding and applicable to the present case. The Tribunal found no merit in the appellant's arguments regarding res judicata and the interpretation of the CENVAT Credit Rules. The Tribunal concluded that the appellant was not eligible for CENVAT credit on LSHS used as fuel in the generation of steam for the manufacture of exempted fertilizer. The appeal was dismissed.