CENVAT on FUEL

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If a manufacturing firm buys an OIL (except for LDO, Petrol & HSD) and uses it for fuel (generating heat) to manufacture finsihed goods...which are sold after levying Excise Duty.....can CENVAT credit be taken for the Excise Duty paid in the purchase of said Fuel.

 Kindly elaborate with reasons for the answer given....

Replies (3)

you can definitely take credit for other industrial fuels  except petrol,diesel LDO but case laws should be elobrated by experts only like Mr  Madhukar N.Hiregange on this point

Fuel like furnace Oil which is used in boiler for generating heat and without it's use the finished product can not be manufactured, the same view is expressed in Reliance case where Orissa High Court gave a favourable judgement understanding the use of the product as an essential consumables. It is not a valid plea that if anything is consumables then it's physical existance must be present in finished product which is normaly taken at department level. My view is it is definitely taking part in value addition process. I agree that physical existance as normally missing in fuel like coal , electricity etc which is certainly not cenvatable. But item like furnace oil is an essential consumables which take part of the process of manufacturing and without it's use the finished product would not be come into existence would definitely be cenvatable. But for this, the entire flow chart of the use of furnace oil may be submitted so that the relationship can be established.

definitely, excise duty paid on fuel (other than LDO, HSD, petrol) can be availed as credit. in fact, the definition of input in rule 2(k) of CCR,2004 itself provides:

input means...................................................................

and includes goods used as fuel ,etc within the factory.

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