Whether Cenvat credit could be denied if the inputs are not utilized within the factory?

PJ/Case Laws/2012-13/1445

Case:-M/S BHARAT CHEMICAL V/S COMMISSIONER OF CENTRAL EXCISE, THANE-II

Citation:- 2013-TIOL-344-CESTAT-MUM

Brief Facts: - The applicants are seeking waiver of pre-deposit of the impugned demands confirmed by the impugned order on the premise that applicants are not entitled to take input/input service credit as same has been utilized outside the factory. The applicant is having two factories, one is where the manufacturing takes place and other is where the boiler is installed. The applicants purchased the furnace oil which was transferred to the other unit for generation of steam through boiler and steam generated in the boiler was transmitted through the pipeline to main manufacturing unit. The steam was used in the manufacturing of the excisable goods. These facts are not in dispute. Revenue is of the view that as furnace oil used for boiler which is located outside the factory premises of the applicants and the service availed in the other unit where boiler is installed is outside the premises of the applicant's factory. Therefore, applicants are not entitled to input/input service credit on the input/service.

Appellant’s Contention: - The appellant relied on the case of Vikram Cement vs. CCE 2006 (194) ELT 3 (SC) = (2006-TIOL-150-SC-CX) and prayed that the stay should be granted.

Reasoning of Judgment: - The Hon’ble CESTAT held that in the case of Vikram Cement (supra) the Hon'ble Apex Court has held that inputs are entitled for CENVAT Credit as utilization within the factory is not the requirement for taking credit; and in the case of Ultra Tech Cement Ltd. vs. CCE 2010 (20) STR 683 = (2010-TIOL-1067-CESTAT-MUM) where this Tribunal has held that for availing the input service credit it is not required to take service within the factory. In these circumstances, the applicants have made out a case for waiver of pre-deposit. Accordingly, they waive the requirement of pre-deposit of the impugned demands i.e. duty, interest and penalty and stay recovery thereof during the pendency of the appeals.

Decision: - The stay was granted.

Comment:-The essence of this case is that Cenvat Credit cannot be merely denied on the premise that inputs/input services have been availed outside the factory and not within the factory as the place of utilisation does not matters when it can be very well established that the said inputs/input services were used in the manufacture of final dutiable products.

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PJ/Case Laws/2012-13/1445

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