Case Law Details
C.C.E. & S.T.-Bhavnagar Vs Navyug Ship Breaking Company (CESTAT Ahmedabad)
CESTAT Ahmedabad held that ship imported for breaking purpose contains fuel and oil and accordingly they are by-product that are inevitably required to be removed from the ship. Hence, CENVAT Credit of the same duly available.
Facts- Respondent during the period 2013-14 to 2014-15 was engaged in breaking of ships imported for breaking purpose at their plot at the ship breaking yard, Alang where goods and material is obtained by way of breaking the ship.
The Show Cause Notice issued to the Respondent alleged that Respondent has wrongly availed cenvat credit of the CVD paid on Bunkers viz. Fuel Oil, Marine Gas Oil, Lube Oil etc. in violation of provisions of Rule 3 read with Rule 2 (k) and Explanation III to sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2004 as the same were not their “input” used in or in relation to manufacture of their final products.
The said Show cause notice was adjudicated by the adjudicating authority who interalia held that Fuel oil, Marine Gas Oil and Lubricating Oil were not used, directly or indirectly in or in relation to the process of obtaining goods and material by breaking up the ship and hence the same cannot be considered as ‘input’ in terms of the provisions of Cenvat Credit Rules and consequently Cenvat Credit of Additional Duty of Customs (CVD) paid on Fuel Oil, Marine Gas Oil and Lubricating Oil is not admissible to the Respondent. The adjudicating authority confirmed the demand of Cenvat Credit of Rs. 50,49,578/- under Rule 14 of the Rules read with Section 11A(4) of the Act and imposed penalty of Rs. 50,49,578/- under Rule 15(2) of the Rules read with Section 11AC of the Act upon Respondent and also imposed penalty of Rs. 5000/- upon Partner of the Respondent.
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