Cenvat credit on fuel used for exempted manufacture denied; reversal amount remanded for verification of actual use.

Inputs used as fuel were held ineligible for Cenvat credit under the binding Supreme Court view, so credit on furnace oil used to generate steam for exempted manufacture was not admissible. The earlier decision in the assessee's own case did not bar reconsideration because res judicata does not apply in tax matters. However, the amount attributable to exempted clearances had not been finally worked out and required verification on the basis of actual use, so the credit issue was decided against the assessee while the reversal amount was remanded for recalculation.

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Issues: Whether Cenvat credit on furnace oil used for generating steam and used in the manufacture of exempted goods was admissible, and whether the assessee could rely on the earlier decision in its own case to resist reversal of credit.

Analysis: The principle of res judicata was held inapplicable in tax matters. The credit dispute was governed by the binding effect of the Supreme Court decisions holding that inputs used as fuel are not eligible for Cenvat credit under Rule 6(1) of the Cenvat Credit Rules, 2002. On that basis, the assessee was held not entitled to credit on furnace oil used in exempted clearances. At the same time, the actual quantum attributable to exempted goods had not been finally ascertained and required verification on the basis of actual use.

Conclusion: The denial of Cenvat credit on furnace oil was upheld, but the matter was remanded for determination of the amount to be reversed or paid on actual usage.

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