(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue has challenged judgement of Customs, Excise & Service Tax Appellate Tribunal dated 09.11.2005. While admitting the appeal on 27.12.2006 following substantial question of law was framed:
“Whether the decision of the Tribunal allowing the party to avail of modvat in respect of furnace oil used as fuel, in manufacturing goods on job work basis, which are cleared without payment of duty under Rule 57F(3) is in accordance with law ?”
2. Counsel for the revenue submitted that the question is covered by virtue of decision of Apex Court in case of Commissioner of Central Excise Vs. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.). He pointed out that such decision was followed in our judgement dated 16.08.2012 in Tax Appeal No. 489 of 2007 in case of Commissioner of Central Excise & Customs Vs. M/s. Baroda District Co. Op. Milk Producers Union Ltd.
3. Though served, no one appears for the respondent.
4. From the record, we notice that the sole question arising in this appeal is squarely covered by decision of Supreme Court in case of Commissioner of Central Excise Vs. Gujarat Narmada Fertilizers Co. Ltd. (supra.). While referring to such decision under similar circumstances, we had allowed the revenue's appeal making following observations:
5. Having heard the learned counsel for the parties and having perused the documents on record, we are of the opinion that the entire issue is squarely covered by the decision of the Apex Court in the case of Gujarat Narmada Fertilizers Co. Ltd. (supra), in particular in para 10 of the decision, it was held and observed as under :
“10. In our view, sub-rule (1) is plenary. It restates a principle, namely, that CENVAT credit for duty paid on inputs used in the manufacture of exempted final products is not allowable. This principle is in-built in the very structure of the CENVAT scheme. Sub-rule (1), therefore, merely highlights that principle. Sub-rule (1) covers all inputs, including fuel, whereas sub-rule (2) refers to non-fuel-inputs. Sub-rule (2) covers a situation where common cenvatted inputs are used in or in relation to manufacture of dutiable final product and exempted final product but the fuel-input is excluded from that sub-rule. However, exclusion of fuel- input vis-a-vis non-fuel-input would still fall in sub-rule (1). As stated above, sub-rule (1) is plenary, hence, it cannot be said that because sub-rule (2) is inapplicable to fuel-input(s), CENVAT credit is automatically available to such inputs even if they are used in the manufacture of exempted goods. The cumulative reading of sub-rules (1) and (2) makes it abundantly clear that the circumstances specified in sub-rule (2), which inter alia requires separate accounting of inputs, are not applicable to the fuel-input(s). However, the said sub-rule (2) nowhere says that the legal effect of sub-rule (1) will stand terminated in respect of fuel- inputs which do not fall in sub-rule (2). In other words, the legal effect of sub-rule (1) has to be applied to all inputs including fuel-inputs, only exception being non- fuel-inputs, for which one has to maintain separate accounts or in its absence pay 8% /10% of thetotal price of the exempted final products. Therefore, sub- rule (1) shall apply in respect of goods used as "fuel" and on such application, the credit will not be permissible on such quantity of fuel which is used in the manufacture of exempted goods. In our view, the above aspect has not been properly appreciated by the Gujarat High Court in the above case of M/s. Gujarat Narmada Valley reported in (2006) 193 ELT 136 (supra).”
6. In view of such decision, no further discussion is necessary. We, therefore, answer the question in affirmative, i.e. against the respondent and in favour of the appellant Department.
5. In the result, tax appeal is allowed. Question is answered in favour of the revenue and against the assessee. Decision of the Tribunal is reversed.
[AKIL KURESHI, J.] [HARSHA DEVANI, J.]
JYOTI