COMMISSIONER OF CENTRAL EXCISE vs M/S.GUJRAT NARMADA V.FERTILIZERS COL.LTD

The Supreme Court ruled that the CENVAT credit on Low Sulphur Heavy Stock (LSHS) used as fuel for producing steam and electricity, which was utilized in the manufacture of exempted goods (fertilizers), is admissible under Rule 6(1) of the CENVAT Credit Rules, 2002. The Court held that the interpretation by the Commissioner, which disallowed the credit based on the exempt status of fertilizers, was incorrect. The decision of the CESTAT, which allowed the credit based on a precedent from the Gujarat High Court, was upheld, affirming that no separate account maintenance is required for inputs intended as fuel.