ORDER
1. The Assistant Commissioner of Central Excise, Gahaziabad vide his Order dated 31-1-1997 disallowed the Modvat credit totally amounting to Rs. 8,84,518/- availed by the appellants on the invoices issued by the Shakur Basti and Mathura depots of M/s. Bharat Peroleum Corporation Ltd. (M/s. BPCL). The grounds on which the Modvat credit is disallowed are extracted from the order-in-original as follows :-
“To sum up, it is amply clear from the above that impugned items are used in relation to the final product but as the invoices issued by M/s. BPCI, Mathura/Shakur Basti do not fulfil various details/conditions prescribed in Notification No. 15/94, 21/94, 33/94 and 64/94, Madvat is disallowed and the demand in respect of both the Show Cause Notices is hereby confirmed.”
2. On appeal, the Commissioner (Appeals), Ghaziabad vide his order dated 24-3-98 confirmed the order of the lower authority in following terms :-
“I have examined the case and considered the matter. It is observed that LDO/RFO are used in generation of electricity and as fuel in the furnace to produce steam resp. in the appellants’ unit. I fully agree with the observation of the adjudicating authority that LDO & RFO are not used directly in the manufacture of the final product. Electricity and steam are exempt from duty as such credit would not be admissible to them. As regards non-availability of particulars on documents it is difficult to treat them proper duty paying documents for the purpose of availment of Modvat credit.”
3. The present appeal is against above order of Commissioner (Appeals). I have heard Sh. M.M. Sharma, Company Secretary of the appellant party and Sh. Rajeev Tandon, SDR for the respondents. The ld. representative of the appellants drew attention to the show cause notices in which the Modvat credit is sought to be denied on the items LDO and RFO received by the appellant under the cover of impugned invoices on the grounds that the LDO was used in generators for generating the electricity which ran the machines for manufacture of the products and that the LDO was not used directly for running the machines. It therefore, do not qualify for taking Modvat credit of duty paid on the LDO. Similarly, for the RFO it is stated in the show cause notice that it is used as fuel in the furnace to produce the steam. As the steam is exempted from excise duty, the Modvat credit is not admissible on this item under Modvat rules. It is also stated that the invoices had been issued by the depots of M/s. Bharat Petroleum Corporation which did not contain the particulars prescribed under Notification Nos. 15/94 and 33/94. Moreover, the depots were not registered with the Central Excise department as required under Notification No. 32/94. Therefore, in view of these facts, the Modvat credit taken on the RFO is not admissible to the party under Modvat rules. It is contended that on consideration of the submissions made by the appellants before the original authority the Modvat credit on the stated items is allowed to them as inputs on merits but however it is denied on the grounds that the invoices issued by M/s. BPCL did not furnish various details /particulars prescribed in the specified notifications. It is argued on behalf of the appellants that no discrepancy in furnishing the particulars has been pointed out in the show cause notice which could have been rectified. The Commissioner (Appeals), notwithstanding the fact that the credit is allowed to them by the original authority on merits, has held that LDO and RFO are not the inputs without the department agitation this ground before him already settled in their favour. As regards the registration of the depots of BPCL as dealers of excisable goods, it is submitted that the oil depots receive the petroleum products without payment of duty from the oil refineries under bond from where these products are cleared on payment of duty to various customers. Therefore, the depots of the oil companies are not required to be registered with the Central Excise authorities as dealers as they are registered to receive the excisable goods under bond without payment of duty and issue them on payment of duty to various customers. I have carefully considered these submissions. As rightly contended by the appellants, they were issued a show cause notice on the grounds that the LDO and RFO being used as fuel are not inputs and therefore, Modvat credit is not available to them on these products under Rule 57A. I: was also alleged in the show cause notice that the particulars as required to be furnished in the invoices under the concerned notifications were not mentioned therein. The Assistant Commissioner in his order has accepted the submissions of the party that the impugned items are used in or in relation to the final products and they are inputs. Therefore, the matter relating to the availment of the Modvat credit on the products having already been settled by, the original authority in favour of the party should not have been raked up by Commissioner (Appeals) in his order without any appeal filed by the Revenue before him. There is also force in the submissions of the party that the particulars required to be furnished in the invoices under the stated notifications all relate to the invoices to be issued by the dealers. Since the BPCL depots are not dealers, there is no question of furnishing such particulars in the invoices issued by them. The duty is paid on the bonded excisable petroleum products for the first time at the depots of the oil companies and the particulars of such duty payment are fully reflected therein. Therefore, there is no ground to deny them the Modvat credit on the impugned items. I accept these submissions of the appellants and allow their appeal setting aside the orders passed by the lower authorities.
