Modvat credit allowed for steam usage in manufacturing despite rule reference error. Appeal dismissed.

COMMISSIONER OF C. EX. & CUS. Versus GUJARAT NARMADA FERTILIZERS CO. LTD.

COMMISSIONER OF C. EX. & CUS. Versus GUJARAT NARMADA FERTILIZERS CO. LTD. - 2006 (193) E.L.T. 136 (Guj.) Issues Involved:
The issues involved in the judgment are whether Modvat credit could be denied for steam used within the plant and the applicability of Rule 57B during a specific period.

Issue 1 - Modvat Credit for Steam Usage:
The respondent, engaged in manufacturing fertilizers and chemicals, used Low Sulphur Heavy Stock (LSHS) as feed/fuel to generate steam for production purposes. The Revenue contended that credit for duty paid on inputs used for electricity generation supplied outside should not be allowed.

Issue 2 - Applicability of Rule 57B:
The dispute between the parties pertained to the periods between November 2000 to March 2001 and April 2001 to June 2001. The Revenue sought to recover credit under Rule 57AH of the Central Excise Rules, 1944 and Rule 8 of the Cenvat Credit Rules, 2001, arguing that credit for inputs used in exempted final products is not permissible. The Tribunal referenced Rule 57B, which the Revenue argued was not in existence during the relevant period.

The judgment highlighted that during the relevant period, Rules 57AA to 57AK were in effect, defining "input" under Rule 57AA clause (d) and outlining conditions for credit under Rule 57AC. Rule 57AD specified the obligation of manufacturers regarding dutiable and exempted goods, stating that credit shall not be allowed on inputs used in exempted goods unless used as fuel, as per sub-rule (2) of Rule 57AD.

The Tribunal found that LSHS was indeed used as fuel/feed for steam generation within the plant for manufacturing fertilizers, chemicals, and electricity. While the Tribunal erroneously referred to Rule 57B instead of Rule 57AD, the factual findings supported the conclusion that no substantial question of law arose, leading to the dismissal of the appeal.

The judgment concluded by acknowledging the services of the amicus curiae, Shri Rakesh Gupta, before parting.