RFG formed by conversion of Energy in form of Electricity on partially processed input, Rule 4(5)(a) of Cenvat Credit Rules not applicable: CESTAT [Read Order]
![RFG formed by conversion of Energy in form of Electricity on partially processed input, Rule 4(5)(a) of Cenvat Credit Rules not applicable: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/06/RFG-conversion-of-Energy-form-of-Electricity-partially-processed-input-Cenvat-Credit-Rules-CESTAT-taxscan.jpg "RFG formed by conversion of Energy in form of Electricity on partially processed input, Rule 4(5)(a) of Cenvat Credit Rules not applicable: CESTAT [Read Order]")
The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Rule 4(5)(a) of Cenvat Credit Rules, 2004 is not applicable as the Residual Fuel Gas (‘RFG’) formed by conversion of Energy in the form of Electricity on partially processed input. M/s. Haldia Petrochemicals Limited, the Appellant is engaged in the manufacture of dutiable final...
The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Rule 4(5)(a) of Cenvat Credit Rules, 2004 is not applicable as the Residual Fuel Gas (‘RFG’) formed by conversion of Energy in the form of Electricity on partially processed input.
M/s. Haldia Petrochemicals Limited, the Appellant is engaged in the manufacture of dutiable final products falling under Chapter 27 and Chapter 39 of the Central Excise Tariff Act at its petrochemical complex at Haldia, with Naphtha being its principal inputs. To meet the electricity and steam requirements of the Petrochemical Complex, the Appellant has set up a 116 MW Co-generation Power Plant as a Joint Venture titled, HPL Co-generation Limited (‘HPLCL’), within the factory complex.
During November 2000 to January 2004, the Appellant had removed Residual Fuel Gas (‘RFG’) generated out of cracking Naphtha to M/s. HPLCL for generation of electricity and steam following the procedure laid down under Rule 4(5)(a) of the Cenvat Credit Rules (‘CCR’), as was in force during the said period. The electricity and steam generated out of the supplied ‘RFG’ were returned to the Appellant for use in the manufacture of dutiable final products.
It was the case of the Revenue that since the RFG was an intermediate excisable product, manufactured out of cracking Naphtha, and being classifiable under chapter sub-heading No. 2711.90 of C.E.T.A., 1985, hence, the same could not be removed from the factory without payment of duty under Rule 4(5)(a) of the CCR or under Notification No. 214/86. A show-cause cum demand Notice was issued to them for the said period on 16 April 2004 demanding a duty of Rs. 10,67,40,103/- alleging suppression of facts.
In light of Maharashtra Aldehydes & Chemicalscase wherein the duty demand on the intermediate product cleared under Rule 4(5)(a) of the CCR was dropped. The two-member comprised of Shri P.K Choudhary, Member(Judicial) and Shri K Anpazhakan, member(technical) allowed the appeal.
To Read the full text of the Order CLICK HERE
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