Cenvat credit on furnace oil & high flaash high speed deisel oil

The e/duty paid on these  are ineligible for/as cenvat credit !!

As per the Cenvat Credit Rules,

The light diesel oil, high-speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.

Hi Trupti,

Whether inputs mentioned by me are covered by the definition of LDO, HSDO or Motor Spirit.

 

Thanks.

Hi Mithun below are some Judgements made in court which will help u to understand in better way:

 

J U D G M E N T

(Judgment of the Court was delivered by Prabha Sridevan, J)

In this civil miscellaneous appeal, the following substantial question of law is raised for consideration. "Whether the CESTAT is right in allowing modvat credit of duty paid on inputs furnace Oil/LSHS used in the manufacture of exempted final products".

2.The assessee is the manufacturer of both Cotton yarn on plain reel hanks and Cotton yarn on cones/cheese. The Cotton Yarn on cones/cheese are cleared on payment of duty and the Cotton Yarn in plain reel hanks are exempted form the payment of Central Excise Duty. The assessee avails CENVAT Credit on Furnace Oil/LSHS oil which are used as fuel for both the dutiable and exempted finished product. The assessee was called upon to reverse the CENVAT credit to the extent of actual quantity of inputs used in the manufacture of exempted finished products and an order was passed against the assessee demanding CENVAT credit to that extent and penalty was also imposed. On appeal it was set aside and the same was confirmed by the Tribunal relying on Sub Rule (2) of Rule 6 of CENVAT Credit Rules, which reads thus:-

"Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel , and manufacture such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods."

3.We find that in 2006-TIOL  30  HC-AHM-CX (COMMISSIONER OF CENTRAL EXCISE & CUSTOMS v. GUJARAT NARMADA FERTILIZERS CO., LTD.,), the Gujarat High Court has held in favour of the assessee on the question whether LSHS which was used for manufacture of fertilisers and chemicals, MODVAT Credit could be denied as follows:- "However, what is material is that in sub-rule (2) an exception is carved out in case of inputs intended to be used as fuel in other words, the necessity of maintenance of separate account or denial of credit cannot be insisted upon in a case where inputs are used as fuel by the manufacturer."

Similarly in 2008(221) E.L.T. 41 (COMMISSIONER OF C.EX. DELHI-IV v. SUPER AUTO (I) LTD.,), the High Court of Panjab and Haryana in the case of MODVAT credit, held as follows:- "Cenvat/Modvat  Furnace oil used as fuel  Whether credit on inputs under Rules 57C and 57CC of erstwhile Central Excise Rules, 1944 used in both dutiable as well as exempted goods is admissible when neither separate accounts maintained nor 8% of price reversed  Modvat credit availed on furnace oil used in production of own final products as well as for jub work articles cleared without payment of duty and without reversing proportionate credit  Rules 57C(2) and 57C(2) ibid showing that Rule 57CC(1) ibid not applicable when inputs are intended to be used as fuel  Furnace oil used as fuel in the present case  Tribunal's order is sustainable  Section 35G of Central Excise Act, 1944  Rule 6 of Cenvat Credit Rules, 2004  appeal dismissed."

4. Therefore where the inputs are intended to be used as fuel, the manufacturer is not obliged to maintain separate accounts. It is for this reason that both the Appellate Authority and the Tribunal held that in case of inputs which are used as fuel for the manufacture of both duty paid and non-duty paid products, no recovery could be made.

I understand that, since you are talking about "output service tax" it is the case of an outpur service provider.

And in case of an output service provider cenvat credit can be taken only in respect of service tax paid in respect of services (input services) provided to the output service provider and not on any other materials consumed in the course of providing output service.

Correct me if I am wrong.

"input" means all goods, except high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. Explanation 1.- The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2.- Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer