2008 (7) TMI 61 - SC - Central Excise

Supreme Court Upholds Tribunal Decision on Modvat Credit for LSHS

The Supreme Court affirmed the Tribunal's decision, dismissing the appeal and upholding the Respondent's entitlement to modvat credit for low Sulphur ... Credit on low Sulphur heavy stock (LSHS) used in the manufacture of steam which in turn was used for the manufacture of the final product, namely, fertilizer which was fully exempt from payment of excise duty – issue is settled in favor of assessee by tribunal in similar cases – since revenue not filed appeal against those decision, those orders attained finality due to non-filing of appeal – hence credit is allowable Issues Involved:1. Entitlement to modvat credit on low Sulphur heavy stock (LSHS) used in the manufacture of steam for the production of a final product exempt from excise duty.Analysis:The appeal before the Supreme Court concerned the entitlement of the Respondent-Assessee to modvat credit on LSHS used in the manufacturing process. The Respondent had been availing modvat credit under Rule 57(B) of the Central Excise Rules 1944 for duty paid LSHS used in generating steam for manufacturing fertilizers exempt from excise duty. The Revenue issued a show cause notice challenging this modvat credit availed by the Respondent. The Assistant Commissioner disallowed the modvat credit, citing Rule 57C, which prohibits credit on inputs used in the production of final products exempt from excise duty. The Commissioner (Appeals) upheld this decision, leading the Respondent to appeal to the Tribunal.The Tribunal, in its order, overturned the decisions of the lower authorities and allowed the appeal of the Respondent. It relied on a previous Tribunal decision in Ballarpur Industries Limited case, which established the entitlement to modvat credit for LSHS used in generating steam for manufacturing final products. The Tribunal also referenced Rule 57B(1)(iv) to support the Assessee's claim for modvat credit. The Supreme Court noted that no appeal had been made against the Tribunal's decision in a similar case involving Raymond Ltd., which further strengthened the Assessee's position.The Supreme Court dismissed the appeal, affirming the Tribunal's decision. It pointed out that a previous judgment in Solaris Chemtech's case had upheld the decision in Ballarpur Industries Limited case, solidifying the Assessee's entitlement to modvat credit for LSHS use. The Court also highlighted that the Revenue had not challenged the decision in Raymond Ltd.'s case, further supporting the Assessee's position. Consequently, the Supreme Court upheld the Tribunal's decision, dismissing the appeal and leaving the parties to bear their own costs.