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CCE & ST, Chennai Versus M/s. Futura Fibers

CENVAT credit - input - fuel - Alleging that as per the definition of input under Rule 2(f) of Cenvat Credit Rules 2001, fuel is an input only when used in generation of electricity and steam, used for manufacture of final products within the factory of production, and that the credit taken on furnace oil used in the generation of steam not used within the factory but cleared to M/s. Futura Polymers is incorrect - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., CHENNAI Versus .....

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And Shri V. Padmanabhan, Member (Technical) Shri S. Nagalingam, AC (AR) for the appellant None for the Respondent ORDER Per Bench The brief facts of the case inter-alia are that the appellants are manufacturers of Polyester Staple Fibre and avail Cenvat credit on the inputs viz., Furnace Oil which is used in the generation of steam. Part of the steam generated is used by the appellants within their factory of production and part of it is supplied to M/s. Futura Polymers (a 100% EOU). Alleging t .....

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s of ₹ 13,80,196/-, ₹ 15,53,552/- and ₹ 14,40,606/-. After due process of law the Ld. Lower authority passed the impugned orders confirming the duty amounts demanded. He also imposed a penalty of ₹ 10,00,000/- under Rule 13 of Cenvat Credit Rules, 2001/2002. In appeal the Commissioner (Appeals) set aside the demand, interest and penalties. Hence the department is now before the Tribunal. 2. On behalf of department, the Shri. Nagalingam submitted that the issue whether nap .....

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posal after hearing the department as well as perusal of records. 4. The Tribunal in the appellant s case reported in 2005 (192) ELT 487 (Tri-Chennai) held that naphtha is covered by the expression goods used as fuel and is eligible for Modvat credit, irrespective of its use for generation of electricity. The Commissioner (Appeals) in the impugned order had relied upon the decision passed by the Tribunal. Against this decision the Revenue filed appeal before the Hon ble High Court and vide judgm .....

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oil in the generation of steam. A part of the steam was transferred to a unit situated outside their factory. Though there is no dispute about the inputs, the fact remains that the steam generated was not used within the factory of production. It is not the case of the assessee that M/s. Futura Industries Limited is a 100% export oriented unit. Rule 57C allows credit of duty in respect of export oriented undertakings. When there is a specific entry in a rule and the said entry pre-supposes that .....

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counsel for the assessee attempted to justify the order passed by CESTAT on a different ground. According to the learned counsel, naphtha was used for manufacture of steam, which in turn was used for generation of electricity and the electricity was supplied to M/s. Futura Polymers Ltd., which is a 100% export oriented unit. The learned counsel by placing reliance on Rule 57C(1)(ii) contended that in case supply is to a 100% export oriented unit, the strict Rule of usage of the inputs used for .....

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