2013 (1) TMI 324 - AT - Central Excise

Tribunal: SBPS and Solvent 1425 Eligible for Cenvat Credit

The Tribunal ruled in favor of the appellant, a manufacturer of Rubber Tyres, allowing the appeal and affirming the eligibility of Special Boiling Point ... Cenvat Credit denied - Special Boiling Point Spirits (SBPS)/Solvent 1425 used by appellant as raw material for manufacture of rubber solution, which is used in retreading of tyres - Held that:- Legislature itself makes distinction between SBPS and “Motor Spirit commonly known as petrol” and hence, the SPBS cannot be equated with “Motor Spirit commonly known as petrol”. Moreover, from heading 271011 for “Light Petroleum oils and preparation” it is seen that there are several varieties of motor spirits covered under different sub-headings - Special Boiling Point Spirits of different boiling point range are covered under SH 2710 1111, 2710 1112 and 2710 1113, while other motor spirits are covered under SH 2710 1119 and “petrol” is classifiable under SH 2710 1119. What is excluded form the definition of ‘input’ is “Motor Spirits commonly known as petrol” not all the motor spirits - decided in favour of the appellant in the case of CCE v. Tuftween Petrochemicals (2005 (2) TMI 296 - CESTAT, NEW DELHI) and since it has not been stayed or set aside by any higher appellate authority, in terms of the Apex Court’s judgment in case of Union of India v. Kamlakshi Finance Corporation Ltd. reported in (1991 (9) TMI 72 - SUPREME COURT OF INDIA) the same is binding on the adjudicating authority - Cenvat credit not to be denied. Issues:Interpretation of the definition of 'input' under Cenvat Credit Rules, 2002/2004 for Special Boiling Point Spirit (SBPS) and Solvent 1425 used in manufacturing Rubber Tyres.Detailed Analysis:1. Issue of Cenvat Credit Eligibility: The appellant, a manufacturer of Rubber Tyres, utilized SBPS and Solvent 1425 in production, claimed Cenvat credit. The Commissioner disallowed the credit, citing these inputs as not falling under the 'input' definition. The appellant contested, arguing that SBPS and Solvent 1425 were not 'motor spirits' excluded from the definition, relying on a Tribunal judgment. The department contended that these inputs were akin to motor spirits and hence not eligible for credit.2. Legal Interpretation: The Tribunal examined the nature of SBPS and Solvent 1425, crucial for manufacturing rubber solutions, not as fuels like petrol. Invoices specified SBPS, not petrol, and legislative distinctions between motor spirits and petrol were noted. The Tribunal highlighted that SBPS was distinct from 'Motor Spirit commonly known as petrol,' as evident from tariff classifications. The Tribunal emphasized that the exclusion was specific to 'Motor Spirits commonly known as petrol,' not all motor spirits, aligning with a previous judgment.3. Precedent and Binding Authority: The Tribunal referenced a previous case where it ruled in favor of SBPS eligibility for Cenvat credit, emphasizing that the judgment was unchallenged and thus binding. Citing legal principles, the Tribunal underscored the precedential value of its decision, especially when not stayed or overturned by higher authorities.4. Decision and Ruling: Considering the arguments and legal analysis, the Tribunal found the Commissioner's order unsustainable. The Tribunal set aside the order, allowing the appeal and affirming the eligibility of SBPS and Solvent 1425 for Cenvat credit. The judgment reinforced the importance of legal precedent and the binding nature of unchallenged tribunal decisions, providing clarity on the interpretation of 'input' under the Cenvat Credit Rules.This comprehensive analysis of the judgment showcases the legal intricacies involved in determining the eligibility of inputs for Cenvat credit, emphasizing the significance of legal precedent and authoritative interpretations in such matters.