TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 854
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....are acquired from the gas fields of Mumbai offshore through sub-sea trunk pipelines. Hazira plant separates different products by treating, condensing and fractionating the raw sour natural gas and condensate received from Gas wells of Bassein and Satellite (herein after referred as 'B&S') fields of Mumbai Offshore. B&S gas is called sour gas and condensate is sour condensate as it contains Hydrogen Sulphide (H25) and Carbon Dioxide (Co2) which is being treated at Hazira plant. Oil and associated gas from Oil fields of Mumbai offshore is being processed at Uran plant. Hazira plant receives sour gas from B&S gas field of Mumbai Offshore and produces the following products by processing/ fractionating gas/condensate: (a) Liquefied Petroleum Gas(LPG) (b) Naphtha (c) Superior Kerosene Oil(SKO) (d) High Speed Diesel(HSD) (e) Sulphur (f) Propane(C2) (g) Natural Gas (h) Aviation Turbine Fuel (ATE) All the above mentioned products are excisable. Out of these, some quantity of LPG is cleared and sold for use by domestic consumers, whereas SKO is cleared and sold for onward sale to domestic consumers through the Public Distribution System, are exempted from Central Excise duty. The ....
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....ntinuous and integrated process, the services availed at any of the area of operation, namely, Well-heads, Process Platforms, Pipelines, Vessels, Hazira Plant, administrative offices at Mumbai etc., have been availed in or in relation to production/manufacture of the excisable products referred above. The processes resulting in production of excisable products viz. Propane(C3) LPG(C3C4), Naphtha, Natural Gas etc start at the oil wells and are carried out in different stages at Well-heads, Well Platforms, Process Platforms and are completed at the Hazira plant, where, the products referred finally emerge as visible marketable products. The entire production process is an integral whole. The services availed at any of the area of operation, namely, Well-heads, Well Platforms, Process Platforms, Pipelines, Vessels, Hazira Plant, administrative offices at Mumbai etc., have been availed in or in relation to production/manufacture of the excisable products referred above. 3.1. Ld. Counsel submits that since the Appellants are manufacturer of dutiable and exempted goods, therefore they take credit on all input services specified under Rule 6(5) of the Cenvat credit Rules, 2004 which are ....
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....e notices further alleged that the units of ONGC were located at separate locations and are in separate jurisdictions and hence it cannot be held that services used at one unit are Input Service for the other. 3.3 The Ld. Counsel further argued that a show cause notice dated 08.04.2010 was issued to the Appellant's Uran Unit on the same ground as to the wrongful availment of Cenvat credit by Appellant's Uran Plant which was distributed by the five ISD's of M/s. ONGC, Mumbai Offshore on 'input services' availed of and used exclusively at the oil fields of Mumbai Offshore. It was alleged by the Department that since crude oil and natural gas are exempted from excise duty, Cenvat credit of services used at Mumbai Offshore was not admissible to Appellant's Uran Plant. The lower authorities had passed the order against the Appellants. The Tribunal vide Order dated 29.12.2012 confirmed the demand of duty and disallowed Cenvat credit amounting to Rs. 40.57 crores. An Appeal was preferred before the Hon'ble High Court of Bombay by the Appellants. One of the issues decided by the Hon'ble High Court was whether the Appellate Tribunal was right in holding that the Appellants are not eligible....
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....l products. The dutiable final products that are manufactured by the Appellant at its Uran plant are fundamentally premised upon the manufacturing process which commences at Mumbai Offshore. There can be no manner of doubt that the input services which go into the process of production at Mumbai Offshore meet the description of services that are utilised by the manufacturer directly or indirectly in or in relation to the manufacture of dutiable final products. The manufacture of the dutiable final products cannot take place without the process in question. To accept the contention of the Revenue would be to completely ignore the implication of the words "used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products." Such a construction as proposed by the Revenue is impermissible. These words used in the subordinate legislation fulfill the statutory object and purpose of presenting a cascading effect and burden of duty. They must be given their plain and natural meaning. At the same time, it would be necessary to clarify that Cenvat credit can be availed of only on that quantity of input service which is used in the manufacture of ....
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.... Corporation Limited (ONGCL) for exploration/production of petroleum from Panna Mukta field. GAIL was appointed as the nominee of the Govt. of India. (c) In case of PM JV, the PSC provides that gas has to be sold to the Govt. or its nominee at offshore. (d) In case of PM JV, the producer is M/s BSEPIL and the Appellants are only a consortium member. (e) M/s BGEPIL as a producer of natural gas from PM JV field discharges tax liability such as royalty etc. as an assessee where the Appellants are not an assessee. (f) The Hon'ble High Court has held that the sale takes place in offshore based on the provisions of PSC of PM JV. (g) The gas extracted from PM JV field is not used for manufacturing of any excisable product at ONGC, Hazira but is wholly sold to Govt. of India or its nominee. (h) The present case under dispute pertains to production of sour gas from the nominated field where there is no PSC. Here the delivery point is in terms of gas sale agreement. In the case under dispute, the same is in Hazira and Sales Tax/ VAT is payable on it. There is no dispute regarding place of delivery and applicability of VAT in such case. 4.1 Ld. AR for the Revenue argued that the decisi....
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....igh and therefore, it cannot be said that the sweetening plant located at Hazira is an integral part of the process. He further submitted that Mumbai High has a separate Central Excise registration for carrying out the manufacturing activity and therefore, credit in respect of services availed at Mumbai High would not be admissible for transportation to the plant located at Hazira. Ld. AR further pointed out that Crude Oil and Natural gas are exempted products and Mumbai High platform of ONGC Limited are engaged exclusively in the manufacture of excisable goods and are also a separate and distinct unit. Ld. AR pointed out that Rule 7 of Cenvat Credit Rules clearly prescribes that Cenvat credit of service tax attributable to service used in unit exclusively engaged in the manufacture of exempted goods or providing exempted services, shall not be distributed. He argued that in the instant case, the Mumbai High platform is separately registered unit, which is engaged in the production of Crude Oil and Gas which are exempted commodity. Thus, Cenvat credit on input services availed for the activities undertaken at Mumbai High cannot be distributed. 5. We have gone through the rival sub....
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....anufacture of exempted goods, this being the plain stipulation contained in Rule 6(1). This is subject to Rule 6(5) which has an overriding provision which allows the availment of Cenvat credit in respect of certain specified taxable services unless they are used exclusively in or in relation to the manufacture of exempted goods. But the point to note is that merely because the Appellant manufactures exempted goods, that would be no justification to disallow to it the benefit of availing of Cenvat credit on that quantity of input service which is utilised in or in relation to the manufacture of dutiable final products. As we have noted earlier, the definition of the expression "input service" is cast in broad terms. The expression "input service" means any service used by the manufacture, whether directly or indirectly or in or in relation to the manufacture of final products. It is impossible to accept the hypothesis that would assert, that input services that are utilized by the Appellant in or in relation to the process of manufacture that takes place at Mumbai Offshore is not a service that is used by the manufacturer in or in relation to the manufacture of dutiable final produ....