Fuel-based Cenvat credit on LDO and LPG was held not reversible for pre-amendment job-work clearances.

Cenvat credit on LDO and LPG used as fuel for manufacturing goods cleared on a job-work basis without duty was not liable to reversal for the period before 16 May 2005. The Tribunal noted that, prior to the amendment of Rule 6(2) of the Cenvat Credit Rules, 2004, the exclusion for inputs used as fuel had not been deleted, and applied the earlier view that fuel fell outside the restriction. On that basis, the credit was held admissible and reversal was not required, so the departmental challenge failed.

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Issues: Whether cenvat credit taken on LDO and LPG used as fuel in manufacture of goods cleared on job work basis without payment of duty was liable to be reversed for the period prior to 16.5.05.

Analysis: The dispute related to a period before the amendment to Rule 6(2) of the Cenvat Credit Rules, 2004. Prior to 16.5.05, the expression excluding inputs intended to be used as fuel had not been deleted. The Tribunal also followed the earlier view that fuel was specifically outside the scope of the restriction, and applied that reasoning to the credit taken on LDO and LPG used in the impugned clearances.

Conclusion: The credit was not required to be reversed and the department's challenge failed.

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