The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata bench granted relief to M/s. Indian Oil Corporation Limited, Refinery Division (IOC), and held that Cenvat credit is available on duty paid treating the activity as manufacturing activity.
The Appellant, M/s. Indian Oil Corporation Limited, Refinery Division is engaged in the manufacture and sale of petroleum products. The petroleum products are manufactured in the refineries of the Appellant situated in various parts of the country. The present appeal relates to the Haldia refinery. In the course of refining crude oil, one of the petroleum products, Bitumen is produced.
During the period from April 2013 to June 2017, the Appellant used Crumb Rubber Modifier (CRM) for mixing with Bitumen to produce Crumb Rubber Modified Bitumen (CRMB) which was cleared upon payment of duty from the Haldia refinery. The Appellant also availed Cenvat Credit on Handling services used during the production of CRMB. Regular Excise Returns were filed reflecting the amount of Cenvat Credit claimed and utilized and clearance of CRMB upon payment of Duty. Permission for mixing CRM with Bitumen to produce CRMB was granted by the jurisdictional Central Excise authorities.
The dispute is regarding availing of Cenvat Credit on the CRM and Handling service used within the Refinery. Vide the adjudication order dated 23.06.2021 Cenvat Credit amounting to Rs.11,62,425/-was disallowed and determined as payable by the assessee along with interest and a penalty of Rs.1,16,243/- was also imposed. Hence, the present appeal is before the Tribunal.
The Authorised Representative, K.Chowdhurysubmitted that it is the case of the Revenue that the Appellant had wrongly availed MODVAT/CENVAT Credit on CRM and Handling Services used for manufacturing CRMB and subsequently utilized the same for payment of Central Excise duty on CRMB inasmuch as the said process did not amount to manufacture of excisable goods as per section 2(f) of the Act.
P K Choudhary, Judicial Member held that “It is an undisputed position that the final product is treated as dutiable and duty is paid by the assessee. When once duty is paid by the assessee treating the activity as manufacturing activity by the Department, Cenvat credit is available and there is no question of denial of Cenvat credit.”
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