2018 (9) TMI 1361 - AT - Central Excise

Tribunal Reevaluates Excise Duty Exemption & Liability, Emphasizes Precedents & Rules

The Tribunal set aside the order-in-original regarding exemption from central excise duties on captively consumed products, emphasizing adherence to ... Exemption from duty of Central Excise - captive consumption - ‘naphtha’ - ‘Bombay High gas oil’ - applicability of rule 6 of CENVAT Credit Rules, 2004 - Held that:- The issue stands settled by the decision in the case of BHARAT PETROLEUM CORPORATION LTD. VERSUS COMMR. OF C. EX., MUMBAI-II [2014 (7) TMI 1117 - CESTAT MUMBAI], where it was held that the dutiability of BHGO and naphtha used in the generation of electricity, which in turn has been used for purposes other than manufacture of excisable goods, the appellant would be liable to Excise duty thereon. The matter remanded back to the original authority, determination of the duty liability after ascertaining availment of CENVAT credit in the manufacture of electricity that is captively consumed, reversal of non-entitled CENVAT credit, and to the extent that the power so generated is not utilized for manufacture of excisable goods - appeal allowed by way of remand. Issues involved:Eligibility for exemption from duties of central excise on captively consumed products, applicability of rule 6 of CENVAT Credit Rules, 2004, liability of excise duty on products used for purposes other than manufacture of excisable goods.Analysis:1. Eligibility for exemption from duties of central excise on captively consumed products:The appeal challenged the order-in-original regarding the eligibility for exemption from duties of central excise on products like 'naphtha' and 'Bombay High gas oil' that are captively consumed. The appellant argued that a previous Tribunal decision had settled this dispute, and the present appeal, concerning the period between March 2007 and September 2007, should follow that precedent. The Tribunal referred to the earlier decision and the High Court's affirmation, emphasizing the need to adhere to the binding precedent.2. Applicability of rule 6 of CENVAT Credit Rules, 2004:The issue revolved around the applicability of rule 6 of CENVAT Credit Rules, 2004, which permits availing credit on inputs used for both dutiable and exempted goods. The jurisdictional authority contended that the appellant had cleared certain products partly for recipients entitled to exemptions and partly for captive consumption. The Tribunal referred to a previous decision in similar circumstances and highlighted the necessity to follow the binding precedent.3. Liability of excise duty on products used for purposes other than manufacture of excisable goods:The dispute also involved the liability of excise duty on products like 'gas oil' and 'naphtha' consumed in generating electricity for purposes other than manufacturing excisable goods. The Authorized Representative argued that the exemption was subject to conditions like reversal of CENVAT credit, which had not been addressed in the present dispute. The Tribunal emphasized the need to recompute duty and interest liabilities based on the directions provided in the earlier decision and remanded the matter back to the original authority for further determination.In conclusion, the Tribunal set aside the impugned order and directed a reevaluation of duty liability considering CENVAT credit, reversal of non-entitled credit, and usage of power not for manufacturing excisable goods. The judgment highlighted the importance of following binding precedents and ensuring compliance with relevant rules and notifications in determining excise duty liabilities.