COMMISSIONER OF INCOME TAX Vs. DALMIA FINANCE LTD

JUDGEMENT

(1.) M/s Dalmia Magnesite Corporation (hereinafter referred to as "the Company") is engaged in business of manufacturing of Dead Burnt Magnesite and Ramming Mass/Mixes. Dead Burn Magnesite is exempt from payment of duty whereas Ramming Mass/Mixes attracts Excise Duty @ 18%. The company availed credit on input used as Fuel viz., Furnace Oil in terms of Rule 57B of the Central Excise Rules, 1944 which was being used to make dutiable as well as exempt goods. The company was availing credit on the whole of furnace oil irrespective of whether it was used in manufacture of dutiable goods or exempt goods. Show cause notice dated 11.03.1997 was issued to the company asking them as to why the credit of Rs.10,92,831/- for the period of May 1997 to September 1997 should not be denied to them because they were availing credit of the full amount irrespective of the fact whether they were manufacturing exempted goods or dutiable goods as prescribed under Rule 57 I of the Central Excise Rules, 1944. Another show cause notice dated 11.03.1998 was issued to the company asking them as to why the credit of Rs.10,89,337/- for the period of October 1997 to February 1998 should not be denied to them because they were availing credit of the full amount irrespective of the fact whether they were manufacturing exempted goods or dutiable goods as prescribed under Rule 57 I of the Central Excise Rules, 1944. The Assistant Commissioner, Salem Division vide Order-in- Original No.10/99 disallowed the credit. The company preferred an Appeal before the Commissioner (Appeals) Trichy which was allowed vide Order No.12/2003 dated 28.01.2003.

(2.) In his orders dated 28.01.2003, the Commissioner (Appeals) formulated the issue as to whether the respondent herein was required to reverse the modvat credit/pay duty proportionate to the furnace oil used in the manufacture the wire rods cleared without payment of duty. This issue was decided in favour of the respondent following the Tribunal s judgment in the case of M/s. Indore Steel & Iron Mills Ltd. decided on 04.02.2002. Appeal preferred by the Department against the said order has been dismissed by the Customs, Excise and Service Tax Appellant Tribunal (hereinafter referred to as the Tribunal ) vide impugned orders dated 02.07.2009.

(3.) The aforesaid issue has now been finally adjudicated and determined by the Supreme Court in the case of Commissioner of Central Excise v. Gujarat Narmada Fertilizers Co. Ltd., 2009 240 ELT 661 . After taking into consideration the relevant Rules including Rule 57AD of the Central Excise Rules, 1944 on the basis of which the Tribunal has also passed the order, the Supreme Court has held that the assessee would not be entitled to any benefit under the aforesaid provision. Relevant discussion in this behalf contained in the Para 10 of the judgment reads as under: