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2016 (11) TMI 772 - CESTAT CHANDIGARH

2016 (11) TMI 772 - CESTAT CHANDIGARH - TMI - Reversal of CENVAT credit - consumable including furnace oil - furnace oil used in the manufacture of dutiable goods as well as final exempted goods cleared by availing the N/N. 04/97 and N/N. 5/98 - Whether credit of duty is admissible to the inputs in the present case in terms of erstwhile Rule 57C and 57CC of Central Excise Rules, 1944, used in both dutiable as well as exempted goods when no separate account has been maintained nor 8% duty reverse .....

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able as well as exempted final products, the appellant is not required to be reversed credit availed on furnace oil which has been used as fuel. - Appeal allowed. - Appeal No. E/3582/2006-Ex(DB) - FINAL ORDER NO. 61532/2016 - Dated:- 4-10-2016 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Shri Naveen Bindal, Advocate for the appellant Shri Harvinder Singh, AR for the respondent PER: ASHOK JINDAL This is the second round of litigation. In the earlier round o .....

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ded to adjudicating authority for deciding afresh after affording a persona/ hearing to the appellants. 2. The facts of the case are that the appellant is taking credit on consumable including furnace oil. A show cause notice was issued to the appellant alleging that the appellant is not entitled to avail credit on furnace oil used in the manufacture of dutiable goods as well as final exempted goods cleared by availing the Notification No. 04/97 and Notification No.5/98, therefore, the appellant .....

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nt submits that the issue has been settled by the Hon'ble Punjab and Haryana High Court in the case of Super Auto (I) Ltd.-2008 (221) ELT 41 (P&H) wherein it was held that the credit on furnace oil which was used as fuel is not required to be reversed. Therefore, as the issue has already been settled, in that circumstance, the impugned order is to be set aside. 4. On the other hand, learned AR reiterated the findings of the impugned order. 5. Heard the parties and considered the submissi .....

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d nor 8% duty reversed in respect of clearances of exempted goods?" 7. Hon'ble High Court has analysed the issue and observed as under: 7. After hearing learned counsel for the parties and perusing the orders passed by the Adjudicating Authority, Commissioner (Appeals) and the Tribunal, we find that there is no merit in the appeal and the same deserves to be dismissed. At the outset we deem it just and appropriate to refer the provisions of Rule 57C(2) & (3) and Rule 57CC(1) & ( .....

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ns of sub-rule (1) shall be deemed to be satisfied only when the manufacturer follows the procedure prescribed in sub-rule (1) of Rule 57CC or the provisions of sub-rule (9) of that Rule are complied with. (3) Sub-rule (2) shall not apply to inputs intended to be used as fuel." x xx x xxx xxx xxx 57CC. Adjustment of credit on inputs used in exempted final products or maintenance of separate inventory and accounts of inputs by the manufacturer.- (1) Where a which is chargeable to duty as wel .....

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he price (excluding sales tax and other taxes, if any, payable on such goods) of the second category of final products charged by the manufacturer for the sale of such goods at the time of their clearance from the factory. xxx xxx xxx xxx xxx (9) In respect of inputs (other than inputs used as fuel) which are used in or in relation to the manufacture of any goods, which are exempt from the whole of the duty of excise leviable thereon or chargeable to Nil rate of duty, the manufacturer shall main .....

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l as in any other final product that is not chargeable to duty the manufacturer in order to take credit has to comply with sub-rule (9) of Rule 57CC of the Rules. It envisages that separate inventory/accounts are required to be maintained in respect of the receipt and use of inputs for the aforesaid purpose. Such a manufacturer is restrained from taking credit of the specified duty paid on such items. 9. It is, thus, clear that the provisions of sub-rule (2) of Rule 57C and sub-rule (1) and (9) .....

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esent case reveal. 8. Further, the issue came up before the Hon'ble High Court of Madhya Pradesh in the case of Flex Chemicals Ltd.-2007 (216) ELT 359 (MP) wherein the High Court has observed as under: 10. The gist of the question is whether the Modvat credit is available on fuel, which is used in manufacture or exempted final products and whether CESTAT is correct in allowing said Modvat credit. 11. For decision of the said question, it is necessary for this Court to refer some of the legal .....

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excise leviable thereon or are chargeable to nil rate of duty is admissible only if the condition of Rule 57CC(1) i.e. clearance of goods on payment of an amount equal to 8% of the price of the goods (excluding Sales Tax and other taxes if any payable on such goods), Rule 57CC(9) i.e. maintenance of separate inventory and accounts of the receipt and use of inputs used in the manufacture of exempted products are complied with. Rule 57C(3) provides that Rule 57C(2) is not applicable to inputs int .....

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