2019 (6) TMI 197 - AT - Central Excise

Tax Tribunal: Actual Usage Key in Cenvat Credit Denial. Res Judicata Inapplicable.

The Tribunal upheld the denial of cenvat credit on inputs used as fuel, emphasizing the need for calculation based on actual usage rather than product ... CENVAT Credit - manufacture of dutiable and exempted dairy products - entire quantity of Furnace oil received in their factory which was used for producing steam and the steam in turn was used for various process of manufacture of dutiable and exempted goods - period July 2001 to May 2005 - HELD THAT:- The Appellants are not entitled to the credit of Furnace oil which is used in manufacture of exempted goods. Reliance placed in the case of COMMNR. OF CENTRAL EXCISE VERSUS M/S. GUJARAT NARMADA FERTILIZERS CO. LTD. [2009 (8) TMI 15 - SUPREME COURT]. Case remanded back to the adjudicating authority to ascertain the quantum of credit to be reversed / paid based upon the actual use of quantity of such input in exempted goods - appeal allowed by way of remand. Issues:1. Appeal against Order-in-Appeal No. 60/2010-AHD-III-KCG/CE/COMMR-A dated 03.03.2010.2. Availment of cenvat credit on furnace oil used for producing steam for manufacturing dutiable and exempted goods.3. Disallowance of credit based on value of products instead of usage.4. Challenge of judgment based on other cases.5. Dismissal of appeal by Appellate Commissioner due to lack of evidence on steam quantity and alternative calculation methods.6. Argument of revenue being bound by earlier High Court order.7. Interpretation of res judicata principle in tax matters.8. Application of judgments in similar cases to deny cenvat credit on inputs used as fuel.Analysis:1. The appeal was filed against an Order-in-Appeal dated 03.03.2010, challenging the demand for recovery of cenvat credit on furnace oil used to produce steam for manufacturing dutiable and exempted goods.2. The Appellants contended that the demand was wrongly confirmed based on product value instead of usage, citing judgments from other cases and emphasizing the need for calculation based on actual usage.3. The Appellate Commissioner dismissed the appeal due to lack of evidence on steam quantity and failure to propose alternative calculation methods, relying on Supreme Court judgments regarding cenvat credit eligibility.4. The Appellant argued that the revenue was bound by an earlier High Court order in their case, citing various judgments to support their position.5. The Tribunal held that the principle of res judicata does not apply in tax matters and upheld the denial of cenvat credit on inputs used as fuel, following Supreme Court judgments.6. The case was remanded to the adjudicating authority to determine the quantum of credit to be reversed or paid based on the actual usage of inputs in exempted goods, while affirming the denial of credit for furnace oil used in manufacturing exempted goods.