TMI Blog2009 (3) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not applicable when the inputs are used as fuel. – Decision of the Tribunal allowing Modvat credit affirmed. - 23 of 2007 and 3328 of 2007 - - - Dated:- 16-3-2009 - Pinaki Chandra Ghose and Sankar Prasad Mitra, JJ. CEXA No. 23 of 2007 and G.A. No. 3328 of 2007 Shri Arindam Sinha, for the Appellant. S/Shri Samir Chakraborty, C.M. Ghorawat and Abhijit Biswas, for the Respondent. [Judgment per : Sankar Prasad Mitra, J.] .- This appeal has been preferred by the appellant against the order dated 5th April, 2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (hereinafter referred to as CESTAT) whereby the Tribunal allowed the appeal filed by the respondent and set aside the order dated 31st De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary 28, 1999 by following the procedure laid down in Chapter X of the said Rules. It is submitted by the learned Advocate for the appellant that the respondent used LDO in the material period in running generators to generate electricity in the manufacture of both Viscose Rayon Yarn and Sulphuric Acid and the Sulphuric Acid was removed from the said factory under Chapter X Procedure without payment of duty. The respondent claimed MODVAT credit of the specified duty on the LDO as an input used in or in relation to the manufacture of both the categories of final products without having maintained separate inventory necessary under Rule 59CC(9) of the Central Excise Rules, 1944. Since the contention of the respondent was not accepted by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions and therefore those decisions cannot be applied in the instant case. According to the appellant Sub-Rule (1) and (9) exempt maintenance of separate inventory only in case of input used as fuel. Rule 57B of the said Rules gives the definition of different categories of inputs. Rule 57B(i)(iii) and (iv), inter alia, defines two categories of inputs as reproduced below: "Rule 57B(i)(iii) - inputs used as fuel; Rule 57(i)(iv) - inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production." 4. Therefore the words (other than inputs used as fuel) in Sub-Rule (1) and (9) of Rule 57CC of the said Rules must necessarily be given a positive mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............. (iii) inputs used as fuel (iv) inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production; 6. Rule 57C(2) speaks about a situation where a manufacturer availed of MODVAT credit on inputs used in the manufacture both dutiable and non-dutiable final products. Rule 57C(3) specifically provided that the provisions of Rule 57C(2) shall not apply to input intended to be used as fuel. Rule 57CC is not applicable when inputs are used as fuel, and therefore under Sub-Rule (9) of Rule 57CC when inputs are used as fuel by the manufacturer of any goods which are exempted from the whole of the duty of excise leviable thereon or chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufacture of both excisable goods cleared upon payment of duty (inter alia Viscose Rayon Yarn and Sulphuric Acid) and without payment of duty (Sulphuric Acid). It is also undisputed that MODVAT credit was taken by the respondent of the duty paid on the said input material, LDO and no separate accounts were maintained by the respondent in respect of LDO used in the generation of electricity which in turn was used for the manufacture of Viscose Rayon Yarn and Sulphuric Acid (respective proportion thereof). It is also undisputed fact that the availment of MODVAT by the respondent of duty paid on LDO to the extent the same was used in the manufacture of final product Sulphuric Acid, cleared under Chapter X Procedure without maintaining sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MODVAT credit. Therefore, what is material is that in Sub-Rule (1) and (9) or Rule 57CC an expression is curved out in case the input intended to be used as fuel. In other words the necessity to maintain separate account and denial of credit cannot be insisted upon in case inputs are used as fuel by the manufacturer. 8. Thus, considering the argument advanced by the learned Advocate of both sides and the Central Excise Rules including the decisions cited at the bar, we are of the view, that the respondent having used the inputs as fuel for generation of electricity which electricity in turn was used in the factory for manufacture of both excisable goods cleared upon payment of duty and Sulphuric Acid without payment of duty cannot be de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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