Commissioner Central Excise & Service Tax vs Reliance Industries Limited Opponents

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1165 of 2011 For Approval and Signature:

HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA =========================================

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the judgment ?

Whether this case involves a substantial

4 question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?

5 Whether it is to be circulated to the civil judge ?

========================================= COMMISSIONER - CENTRAL EXCISE & SERVICE TAX -

Appellant(s) Versus RELIANCE INDUSTRIES LIMITED - Opponent(s) ========================================= Appearance :

MR GAURANG H BHATT for the Appellant.

Mr.J.C.Patel with Ms.Shipa Balani and Mr.Dilip Kanojia for MR RS SANJANWALA for the Opponent.

========================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 09/07/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI)

1. We have heard Mr.Gaurang H.Bhatt, learned counsel for the appellant and learned counsel Mr.J.C.Patel assisted by Ms.Shipla Balani and Mr.Dilip Kanojia appearing for the respondent.

2. This Tax Appeal has been admitted on two substantial questions of law. The first substantial question of law is as under:

Whether in the facts and circumstances of the case, the Tribunal is justified in holding that the duty paid on fuel is sufficient to satisfy the requirement of Rule 6(1) of Cenvat Credit Rules, 2004 eventhough, such fuel is used in the generation of electricity which in turn is being used in the factory for activities which are non excisable ?

3. The learned counsel for the appellant does not dispute that duty paid is on the fuel (GT fuel) and that is utilised by the respondent for generating electricity and electricity is used within the factory premises for production of various goods and other other purposes also but everything is done within factory premises or premises of the respondent. Mr.Gaurang H.Bhat has relied on para 3.13 of the order passed by the Commissioner of Central Excise dated 29.3.2007 wherein the Commissioner has held as under:

"3.13. Out of total amount of credit of service tax of Rs. 14,57,85,528/-attributed towards exempted gods, the Notice has already paid certain amount of credit of Service tax attributed towards exempted SKO(PDS) and LPG(Domestic), to the tune of Rs. 10,77,02,113/- as submitted in their defence reply towards amount of service tax attributed towards clearances of SKO(PDS) and LPG(Domestic). The same is liable to be appropriated against the total recovery of amount of credit of service tax attributed towards manufacture and clearance of exempted goods."

4. Learned counsel for the appellant has vehemently urged that remaining amount of Rs. 3,80,83,415/- has not been paid by the respondent which is credit of input use in exempted products and this amount should have been reversed as per Rule 6(1) of the Cenvat Credit Rules, 2004. According to the learned counsel for the respondent, the respondent have been manufacturing exempted LPG SKO for which the respondent were to reverse credit under Rule 6(1) of Cenvat Credit Rules, 2004. The respondents have been reversing the credit with regard to aforesaid two products, namely LPG and SKO, but according to the Commissioner, the reversion of credit is on lower side though it should have been on higher side. According to the learned counsel for the respondent, the department had not filed any appeal, therefore, in the appeal of the respondent, the matter could not be remanded on the ground that quantification of amount suffers from calculation error. The appellant has not raised any such question before this Court.

4.1 The question raised is with regard to electricity used within the factory premises of the respondent. The learned counsel for the respondent has placed reliance on the decision of the Apex Court in the case of Commissioner of Central Excise, Vadodara v. Gujarat State Fertilizers and Chemicals Ltd. 2008(229) E.L.T.9(S.C.),wherein the Apex Court has held that admissibility on inputs used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production, credit was available. He has placed reliance on paragraphs 9 and 10 of the aforesaid decision.

5. It is not disputed by the appellant that electricity has been used in the factory premises by the appellant. No material has been brought on record by the learned counsel for the appellant to establish that electricity generated by the respondent is being used for township.

6. Therefore, in view of the law laid down by the Division Bench of this Court and the Apex Court,we are of the considered opinion that first question is decided in favour of the assessee and against department.

7. Second substantial question of law formulated in this Appeal does not survive.

(V.M.SAHAI,J) (N.V.ANJARIA,J) ***vcdarji