V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. Flex Chemicals Ltd., the issue involved is whether the entire duty of Excise paid on Residual Fuel Oil (RFO) used as inputs is available as Modvat Credit or the Credit is restricted to the amount of Excise duty calculated at the rate of 10% ad valorem.
2. Shri Kailash Chander, Representative of the Appellants, submitted that the Appellants manufacture Polyster Chips and avail of Modvat Credit in respect of inputs as well as capital goods; that the Asstt. Commissioner, Central Excise under Adjudication Order No. 51/99, dated 14-4-99 restricted availment of Modvat Credit on RFO @ 10% ad valorem as the RFO falls under the same category under which Light Diesel Oil, bitumen and paraffin falls and all these products including RFO are classifiable under Subheading 2713.30 of the Schedule to the Central Excise Tariff Act; that the Commissioner (Appeals) also under the impugned Order has restricted the availment of Credit holding that RFO is a generic name and irrespective of the names under which such goods, as classified under 2713.30, are received, they would continue to be RFO. The learned Representative submitted that the issue involved has been decided by the following two decisions of the Tribunal :-
(1) Camphor & Allied Products Ltd. v. CCE, Lucknow – [2002 (147) E.L.T. 600 (T)] = 2002 (51) RLT 169 (CEGAT)
(2) CCE, Chandigarh v. Arti Steels Ltd. [2001 (138) E.L.T. 1066 (T)] = 2001 (47) RLT 571 (CEGAT).
3. Shri S.C. Pushkarna, learned D.R., reiterates the findings as contained in the impugned Order.
4. We have considered the submissions of both the sides. Notification No. 5/94-CE. (N.T.), dated 1-3-94 was amended by Notification No. 14/97-CE (NT), dated 3-5-1997 to restrict the availment of Modvat credit in respect of some specified products. The proviso reads as under:-
“Provided further that, the credit of specified duty paid in respect of inputs, namely, naphtha, furnace oil, low sulphur heavy stock, light diesel oil, bitumen and paraffin wax falling under Chapter 27 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the manufacture of final products in any place in India shall be restricted.”
5. The issue whether the Modvat Credit is restricted to the extent of 10% of RFO came up for consideration of this Tribunal in the case of Arti Steels Ltd, (supra). The Tribunal has held that “since the RFO on which the Modvat Credit had been claimed by the Respondents does not stand covered by the Notification No. 14/97 which restrict the claim of the Modvat Credit in respect of the goods produced or manufactured in India to the extent of excise duty calculated at the rate of 10% ad valorem, we do not find any legal infirmity in the impugned Order of the Commissioner (Appeals) and as such the same is upheld.” Similar views were expressed by the Tribunal in the case of Camphor & Allied Products case wherein it was also observed by the Tribunal that Sub-heading 2713.30 makes it clear that Sub-heading’s coverage includes Heavy Petroleum stock, Low Sulphur Heavy Stock and other Residual fuel oil and not merely to the inputs named in Notification No. 14/97. Chapter Heading 2713.30 is of wider amplitude, while restriction placed under notification No. 14/97 is narrower in scope. The Tribunal, therefore, held that there was no merit in the contention of the Revenue that the restriction regarding input credit imposed under Notification No. 14/97 applies to the RFO received by the Appellants. Following the ratio of these two decisions I set aside the impugned Order and allow the appeal.