Ship Fuel Oil, Foodstuff not considered Inputs Ship Breaking Scrap Manufacture directly or indirectly: Gujarat HC upholds CESTAT Order [Read Order]

In a recent case, the Gujarat High Court while upheld  the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) order held that Ship Fuel oil, Food Stuff are not considered inputs of ship breaking  scrap manufacture directly or  indirectly.

The appeal was filed by the petitioner Gautam Ship Breaking Ind. Ltd. against the  order passed by the Customs, Excise and Service Tax Appellate Tribunal. While admitting the appeal, this Court observed that the issue is covered by the decision of this Court in case of Commissioner of Central Excise vs. Gupta Steel .

Mr.Hirak Shah and Mr. Nikunt Raval counsel for petitioner submitted that the  Supreme Court by order dated October 24, 2018, considering the low tax effect involved in the case declined to entertain the appeal in case of Commissioner of Central Excise Bhavnagar v. M/s Gupta Steel and dismissed the Civil Appeal .

During the adjudication the court observed that “The authorities below upheld that the fuel oil and foodstaff on board ship are not inputs required directly or indirectly or in relation to manufacture of scrap emerging from the breaking of the ship. “

Therefore the bench further observed that “the modvat credit is not admissible to the appellant. It has also been held that charging of interest on the amount of credit lying unutilised is not sustainable.”

After analyzing the facts and arguments of both parties, a division bench of Justice Bhargav D. Karia and Justice Niral R. Mehta relied upon the decision of Commissioner of Central Excise vs. Gupta Steel observed that fuel oil and foodstuff on board ship are not inputs required directly or indirectly or in relation to manufacture of scrap emerging from the breaking of the ship, and therefore, not eligible for modvat credit.

To Read the full text of the Order CLICK HERE

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