IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 164 of 2025 ==========================================================

COMMISSIONER OF CENTRAL GST AND C.EXCISE RAJKOT Versus NAYARA ENERGY LTD.

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Appearance:

MS HETVI H SANCHETI(5618) for the Appellant(s) No. 1 MR VISHAL AGRAWAL with MS. DIMPLE K. GOHIL(7451) for the Opponent(s) No. 1 ==========================================================

CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA and HONOURABLE MR. JUSTICE PRANAV TRIVEDI Date : 06/11/2025

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)

1. This appeal is filed under Section 35-G of the Central Excise Act, 1944, at the instance of the Commissioner of Central Excise and Service Tax, Rajkot and is directed against the order passed by the Central Excise and Service Tax Appellate Tribunal, West Zone, Ahmedabad in Appeal No. E/10021/2022-DB.

2. At the outset, learned advocate Mr. Vishal Agrawal for the respondent – Company has submitted that by the order dated 23.01.2020 passed in Tax Appeal No. 849 of 2019, on an identical issue, the Coordinate Bench has admitted the appeal by framing two questions, which are akin to question no.4(iii) of the present appeal. However, learned advocate Ms. Hetvi Sancheti has submitted that the question no. 4(i) is also relevant, and the same has direct bearing on question no. 4(ii) and 4(iii). To which, learned advocate Mr. Agrawal has submitted that the very same question has been declined by the the Coordinate Bench in the order dated 23.01.2020.

2.1 Learned advocate Ms. Sancheti has submitted that in view of the judgment passed by the Supreme Court in the case of Union of India & Anr. v. VKC Footsteps India (P) Ltd. reported in 2022(2) SCC 603, the question no.4(i), will have the relevance as the Supreme Court has held that the anomalies of the formula per se cannot result in invalidation of fiscal rule, which has been framed by the nexus of power of delegated legislation. It is therefore submitted that in the present case, the tribunal has, in fact, invalidated the formula as per Rule 6(3A) of the Cenvat Credit Rules, 2004.

3. In response to the aforesaid submissions, learned advocate Mr.Agrawal has submitted that the law enunciated by the Supreme Court in the case of VKC Footsteps India (supra) will not apply to the present case, as the judgment rendered is different in regime in CGST.

4. We have heard the learned advocate for the respective parties, while admitting the appeal, we may refer to the order dated 23.01.2020 passed by the Coordinate Bench in Tax Appeal No. 849 of 2019, wherein the Coordinate Bench has held thus:-

“3. We are inclined to admit this appeal only on the following two questions:

(i) Whether the Hon’ble Tribunal, is right to hold that the Notification No. 13/2016-CE(NT) dated 01.03.2016 (effective from 01.04.2016) issued by the Government of India, Ministry of Finance, Department of Revenue , amending the provision of Rule 6 of CENVAT Credit Rules, 2004 has retrospective effect?

(ii) Whether the Hon’ble CESTAT is right to hild that the amendment to rule 6(3A) by Notification No. 13/2016-CE(NT) dated 01.03.2016 of the CENVAT Credit Rules, 2004 is clarifactory in nature?”

5. Thus, so far as the question no. 4(ii) and 4(iii), are concerned, the same are perimetarial questions framed by the Coordinate Bench in Tax Appeal No. 849 of 2019, which is pending for final hearing. So far as question no. 4(i), which is the case of the present appellant is as under :-

“4(i) Whether the Hon’ble Tribunal erred in interpreting and reading down Rule 6(3A) of the Cenvat Credit Rules, 2004, by holding that “Total Cenvat Credit taken on Inputs and Input services” should include only the common inputs and input services used for both exempted and taxable goods, rather than considering all Cenvat credit taken on inputs and input services, as contended by the Department contrary to the principles of law laid down in Union of India Vs. VKC