2011 (1) TMI 781

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....al goods used in or in relation to the manufacture of the finished product. One of the inputs used by them is furnace oil which was used for generating electricity, which, in turn, was used for manufacture of dutiable as well as fully exempted finished products. The Department was of the view that in terms of Erstwhile Rule 57C readwith Rule 57CC of Central Excise Rules, 1944 and subsequently in terms of Rule 6(1) readwith Rule 6(2) of Central Excise Rules, 2001, the respondent were not entitled for Cenvat credit of duty paid on the fuel, which was used for generating electricity, which, in turn, was used in or in relation to the manufacture of the exempted final products. It is on this basis that a show cause notice was issued to the respo....

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....t finished products, the assessee is not required to reverse any credit of the duty paid on the quantity of furnace oil/LSHS used in the manufacture of electricity which, in turn, was used in or in relation to the manufacture of fully exempt finished products. It is against this order of the Commissioner (Appeals) that the Department has come in appeal before the Tribunal. 2. Heard both the sides. 2.1 Shri Sunil Kumar, the learned Departmental Representative pleaded that the issue involved in this case is squarely covered in favour of the Department by the judgment of Hon'ble Supreme Court In the case of Commissioner of Central Excise v. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.), wherein i....

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....as been used as a fuel input for generation of electricity which, in turn, had been used for manufacture of finished goods in the factory, the Cenvat credit has been correctly availed. He also cited the judgment of Hon'ble Punjab & Haryana High Court in the case of CCE, Delhi-IV v. Super Auto (I) Ltd. reported in 2008 (221) E.L.T. 41 (P&H), wherein the Hon'ble High Court held that when furnace oil was used as fuel in or in relation to the manufacture of dutiable as well as finished final product neither separate account and inventory was required to be maintained nor an amount @ 8% of the value of the exempted goods was required to be paid. On the question of limitation, he pleaded that the demand is the time-barred as longer limitation per....

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....ts, including fuel, whereas sub-rule (2) refers to non-fuel-inputs. Sub-rule (2) covers a situation where common cenvated inputs are used in or in relation to manufacture of dutiable final product and exempted final product but the fuel-input is excluded from that sub-rule. However, exclusion of fuel-input vis-à-vis non-fuel-input would still fall in sub-rule (1). As stated above, sub-rule (2) is plenary, hence, it cannot be said that because sub-rule (1) is inapplicable to fuel-input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods. The cumulative reading of sub-rules (1) and (2) makes it abundantly clear that the circumstances specified in sub-rule (2), which int....