Maruti Suzuki Ltd.

versus CCE (2009) 9 SCC193

Significance of "contribution" as characterized in Rule

2(k) of CENVAT Credit Rules, 2004.
As per Rule 2 (k) "input" signifies
(i) all merchandise, aside from light diesel oil, rapid
diesel oil and engine soul, regularly known as petroleum,
utilized in or corresponding to the assembling of eventual
outcomes whether straightforwardly or by implication and
whether or not contained in the end result and
incorporates greasing up oils, lubes, cutting oils, coolants,
extras of the end results cleared alongside the eventual
outcome, products utilized as paint, or as pressing
material, or as fuel, or for age of power or steam utilized
in or comparable to fabricate of end results or for some
other reason, inside the processing plant of creation;
(ii) all products, with the exception of light diesel oil,
rapid diesel oil, engine soul, usually known as petroleum
and engine vehicles, utilized for offering any result
assistance;
Clarification 1.- The light diesel oil, fast diesel oil or engine
soul, generally known as petroleum, will not be treated as
a contribution for any reason at all.
Clarification 2.- Input incorporate products utilized in the
assembling of capital merchandise which are additionally
utilized in the industrial facility of the producer;
Realities.
Litigant Maruti Suzuki Ltd. is occupied with thebusiness
of assembling engine vehicles . These engine vehicles are
gotten on installment free from obligation. Assessee
asserted CENVAT credit on "contribution" as per
CENVAT Credit Rules. Assessee has introduced three
turbines in their plant for age of power involving naphtha
as fuel to run the gas turbines and are profiting CENVAT
Credit on naphtha utilized for age of power in gas
turbines.
Assessee additionally utilizes diesel creating set 3 for age
of power with the utilization of diesel for which they had
not benefited any credit.
In their industrial facility, assessee has a typical
dispersion point for power produced in turbines as well as
DG set and the whole power which is created in the
turbines and DG set(s), set in the processing plant, is
appropriated through normal dissemination point.
During the contested period assessee got a section free
from power created in the manufacturing plant to its joint
endeavors, sellers etc.Revenue asserted Tax on the part of
power which was rolled out to merchants, joint endeavor
organizations.
Conflict of the appealing party
Inasmuch as naphtha is utilized as fuel for age of power,
appealing party is qualified for assume praise of obligation
paid on it and there is no compelling reason to turn
around proportionate credit to the degree of force rolled
out to joint endeavors, sellers and so on
Rule which characterize "input", is in two sections.
The initial segment is the particular part followed by the
comprehensive part.
In the comprehensive section a few things stood included,
for example, greasing up oils, lubes, cutting oils, coolants,
embellishments, merchandise utilized as paint, or as
pressing material, or as fuel, or for age of power or steam
utilized for assembling of eventual outcomes or for some
other reason, inside the industrial facility of creation.
Since the litigant had involved naphtha as fuel for age of
power, henceforth, the said thing fell inside the
comprehensive piece of the definition.
Hence inasmuch as naphtha got in the litigant's plant was
utilized as fuel, the equivalent stood covered by the
meaning of "input" independent of the way that some
piece of power produced by utilization of naphtha stood
cleared external the industrial facility.
In addition it was additionally asked, that, in any event,
expecting that the articulation "inside the processing plant
of creation" stood joined to the articulation "merchandise
utilized for age of power" it would just imply that
products utilized for age of power ought to be utilized
inside the industrial facility of creation of last product(s).
All in all, the said articulation "inside the processing plant
of creation" would apply to things utilized for age of
power and not to power thusly and since in the current
case naphtha stood utilized inside the plant of creation of
the eventual outcome, it fell inside the meaning of "input".
Subsequently, the appealing party was qualified for the
credit of obligation paid on the whole amount of naphtha
utilized as fuel.
It was additionally fought that once naphtha came to be
utilized in age of power which was mostly utilized for
hostage utilization and somewhat in different units of the
litigant it was not open to the Department to turn down
regarding credit on the ground that piece of the power was
cleared external the plant to the joint endeavors, sellers
and so on
In this association, it was presented that under the Cenvat
Credit Rules, a producer of eventual outcome was
permitted to assume praise of indicated obligation paid on
any info got in the manufacturing plant .
There is no condition appended to it. Consequently, it was
not open to the Revenue to turn down regarding credit on
the ground that piece of the power stood cleared external
the production line to its joint endeavors, merchants and
so forth
It was additionally presented that under Rule 6(1) , when
information was utilized in the production of excluded
merchandise, Cenvat credit isn't acceptable.
In any case, Rule 6(1) was not drawn to current realities of
the current cases as naphtha was "utilized as fuel" in age
of power which is certainly not an excisable thing.
Since power was neither absolved nor chargeable to
'nothing' pace of obligation, Rule 6(1) was not material on
account of naphtha utilized in the age of power or steam
and, along these lines, the litigant was qualified for profit
full acknowledge on naphtha as the limitation under Rule
6(1) was not pertinent.
Hence, rolling out a piece of power produced in the
processing plant of the appealing party to its joint
endeavors or merchants could never have denied the
litigant of the credit of obligation paid on naphtha utilized
as fuel in their manufacturing plant.
Dispute of Revenue.
Fundamental thought of CENVAT credit is that it is
allowable insofar as the information sources are utilized in
or comparable to the assembling of end results, regardless
of whether straightforwardly or in a roundabout way and,
in this manner, the CENVAT conspire was not intended to
give bonus benefits via credit to inputs not utilized at last
in or according to make of the eventual outcomes yet are
utilized in or corresponding to the creation of power .
Meaning of "input" was expected to be perused in general
and not in a disjunctive way
 Explicit piece of Rule 2(k ) covers all inputs as long as
they were utilized in or corresponding to the assembling of
last product(s), straightforwardly or in a roundabout way.
Since the litigant has involved naphtha in the age of
power, some portion of which has been consumed external
the processing plant or creation; that the said input has
not been utilized as fuel fundamentally however it has
been utilized for the particular reason for age of power
consumed external the manufacturing plant of creation
and subsequently the said naphtha would not fall inside
the meaning of "input"under Rule 2(k)
Thinking of the Court.
Meaning of "input" can be partitioned into three sections,
to be specific:
(I) explicit part
(ii) comprehensive part
(iii) spot of utilization
(I) explicit part,
"input" is characterized to mean generally merchandise,
aside from light diesel oil, high velocity diesel oil and
petroleum, utilized in or comparable to the assembling of
eventual outcomes whether straightforwardly or by
implication and whether or not contained in the end
result.
The critical necessity, hence, is that generally merchandise
"utilized in or according to the assembling" of end results
qualify as "input". This assumes that the component of
"fabricate" should be available.
On account of J.K. Cotton Spinning and Weaving Mills
Co. Ltd. v. S.T.O. 1965 (16) STC 563 SC it was held that
the articulation "in the production of merchandise" ought
to ordinarily incorporate the whole interaction carried on
by the vendor of changing over unrefined substance into
completed merchandise.
It was additionally held that where a specific interaction
(age of power) is so necessarily associated with a definitive
creation of merchandise, that, yet for such cycle,
production of products would be futile, then, at that point,
products expected in such interaction would fall inside the
articulation "in the assembling of merchandise".
On account of Union Carbide India Ltd. v. Gatherer of
Central Excise, 1996 (86) ELT 613 , a Bench of CEGAT
saw that a wide effect of the articulation "utilized
comparable to produce" should be permitted its normal
play.
Inputs (unrefined substances) utilized in the whole course
of transformation into completed items or some other
interaction (like power age) which is indispensably
associated with a definitive creation of end result needs to
fall inside the above articulation. It was seen that the
object was to broaden the extension, ambit and content of
"inputs".
The reason behind the above articulation is to extend the
ambit of the definition to draw in everything merchandise,
which don't enter straightforwardly or by implication into
the completed item, yet are utilized in any action worried
about or relating to the assembling of the completed item.
Power age is an autonomous movement. It doesn't frame
part of the interaction in which "inputs" are changed into
discrete recognizable ware, however it might stand
associated with such cycles.
It might not have any worry with the assembling of the
completed item.
Nonetheless, power age is an auxiliary action. It is a
movement which is foremost to the course of assembling of
the eventual outcome. It is by virtue of the utilization of
the above articulation "utilized comparable to fabricate"
that such an action of power age comes surprisingly close
to the definition since it is essentially associated with the
assembling of the eventual outcome.
In CCE v. Ballarpur Industries Ltd. (1989) 4 SCC 566
distinction between the articulation "utilized in the
assembling" and "utilized as information (unrefined
substance)" was featured.
 It was held that without a doubt the said two articulations
are particular and isolated, however, when an auxiliary
cycle (like power generatio