TaxTMI 
TaxTMI 
2019 (3) TMI 973
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....ification 14/97-CE(NT) is equally applicable to 'Gas Oil' consumed by the respondent. He pointed out that the plain reading of the Notification clearly restricts the credit to 10% and no discretion has been given to any authority to ignore the said notification. He referred to the Section 87 of the Finance Act 1997, which introduced this restriction and gave it retrospective effect, to state that legislative intent was to restrict the credit and not to allow the same. He argued that the Commissioner (Appeals) has ignored the content of the Notification 14/97-CE(NT). He further pointed out that the appellant had voluntarily paid duty on the intermediary products consumed in factory for generation of electricity without availing exemption Notification and that the said issue is settled as the appellants have not challenged the payment of duty. He argued that the said fact of wrong payment of duty cannot be used in claiming inadmissible credit. He further pointed out that Hon'ble Apex Court in the case of Gangadharan vs Commissioner of Income Tax [2008-TIOL-140 SC-IT-LB] has held that mere acceptance of an order in a different case does not operate as a bar for the Revenue to prefer a....
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....before the 'authorities', which ultimately culminated in their favour by higher appellate authority. He draws our attention to another final decision of the Tribunal being Order No. 421/06-Ex. Dt. 1.5.06, wherein by taking note of the above submission of the same appellant M/s IOCL, Tribunal has observed as under: "4. As the appellant has succeeded in its claim for exemption, the entire duty paid by it is required to be returned to it. However, in the peculiar facts of the present case, such refund is not necessary. Allowing the erroneously collected duty amounts as modvat credit obviated the requirement for refund and restores the amounts to the appellant. Applying the restriction contained in Notification 14/97 to the credit amounts would have the effect of reducing the refund to 95%. There is no justification for such reduction." 3. He further submits that on an ROM application filed by the Revenue, Tribunal rejected the same by observing as under: "4. during the hearing of the case today, the Ld. Counsel for the applicant has produced the judgment of the Supreme Court in Civil Appeal Nos. 7450-51 of 2000 with Civil Appeal no. 9919-9929 of 2003 between the p....
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....nal in the case of Gujarat State Fertilizers and Chemicals Limited-2014 (309) ELT 94 (T), permitted availment of the Credit @ 15%. He pointed out that in the said decision reliance has also been placed in the decision of Hon'ble High Court of Gujarat in the case of Gujarat Paraffins Pvt. Limited-2012 (282) ELT 33 (Guj.) 4. We have gone through rival submissions. We find that Notification 14/97-CE (NT) amends Notification 5/94-CE(NT) by introducing a proviso which restricts the availability of credit on certain fuel oils like LSHS to 10% ad valorum. In the present case it is not disputed that the item under dispute i.e. Gas Oil is also LSHS. The purpose of the aforesaid Notification has been described in the trade notice No. 56/1997-(S) as follows: "In the Budget 1996 excise duty on certain petroleum products was raised from 10 to 15%. As the prices or these goods were administered prices, the increase in duty could not be passed on to the consumers and had to be absorbed by the public sector refineries from the oil pool account. The buyers or these goods took credit of the duty paid under the modvat scheme at the rate of 15% though they had borne duty incidence of only 10% wh....
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....een observed. "5.1 It is evident from the above trade notice that idea of restricting credit to only 10% was that buyer of the concerned inputs had borne the duty incidence of only 10% and the remaining 5% was absorbed by the Public Sector Refineries. In the present proceedings of the appellant Public Sector Refinery has only borne 'Zero%' of the duty and the entire duty incidence on Naptha is borne by the appellant under Rule 196 of Chapter X of Central Excise Rules, 1944 for not using the inputs for the intended purpose for which the inputs were procured. The provisions of Notification No. 5/94-C.E. (N.T.), dated 3-5-97, as amended, thus will not be applicable. The facts of the present case are similar to the facts involved in case of imported goods on which higher CVD was paid, as in the case of Gujarat Paraffins Pvt. Ltd. v. Oil (supra). Paras 37 & 38 of this order passed by jurisdictional High Court is relevant and is reproduced below :- 37. It is a settled legal proposition that if initial action is not in consonance with law, subsequent proceedings would not sanctify the same. In such a fact situation, the legal maxim sublato fundamento cadit opus is applicable, ....
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....only 10% right from July 23, 1996 in case of APM products i.e. petroleum products purchased from public sector refineries was clarified by the Government itself. The objective of the amendments so made vide Notification No. 14/97 and Section 87 of the Finance Act, 1997 was to restrict Modvat credit to 10% for inputs produced and manufactured in India is thus an undisputable position. By clubbing non-APM products, i.e. inputs imported on payment of full duty at the rate of 15%, the objective was not achieved and the amendments had no rationale relation with imports of petroleum products at full rate of duty. 5.2 In view of the above observations and the relied upon case laws appellant was liable to credit of duty paid @ 15% and cannot be restricted to 10% as the provisions of Notification No. 5/94-C.E. (N.T.), as amended are not applicable to the present facts because the entire duty incidence is borne by appellant as per Rule 196 of Central Excise Rules, 1944 and not the Public Sector Refinery." It is apparent that the entire decision is based on the decision of Hon'ble High Court in the case of Gujarat Paraffins Pvt. Ltd. which was on significantly different facts as observe....
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....tion 14/97 to the credit amounts would have the effect of reducing the refund to 95%. There is no justification for such a reduction. 5. In the result, the impugned order is set aside and the appeal is allowed with consequential relief to the appellant." In the instant case, the facts are different in so far as the appellant had not challenged the duty liability and hence there is no case of refund of duty paid by the appellant on captive consumption of the gas oil (LSHS). 4.4 The sole issue before us is if the appellant are entitled to take credit of the entire duty of 15% paid by them as credit when Notification No. 14/1997-CE (NT) restricts the same to 10%. In this regard, it is seen that Hon'ble Apex Court in the case of Excon Building Material 2005 (186) ELT 0263 (SC) has observed as follows: "7. It is well settled that where the wording of a Notification are clear then the plain language of the Notification must be given effect to. An interpretation which is not borne out by the plain wordings of the Notification cannot be given. A reading of the Notification makes it clear that the concessional rate of duty is only available to blocks, slabs, lintels, concret....