https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=763943 https://www.taxtmi.com/caselaws?id=763943 Reversal of Cenvat credit on inputs and input services used in the manufacture of exempted goods, specifically Di-Ammonium Phosphate (DAP), under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 - by-product in the manufacturing process of copper products - exempt goods or not - HELD THAT:- Di-Ammonium Phosphate (DAP) is being manufactured by the appellant by using phosphoric acid and in-house manufacturing of the sulphuric has been obtained by processing sulphuric acid. It is an accepted fact that sulphuric acid is unintended product which emerges during the process of copper concentrate while manufacturing various types of copper products. This Tribunal in the appellant s own case, vide final order No. 12425-12427/2023 dated 02.11.2023 reported under [ 2023 (11) TMI 1070 - CESTAT AHMEDABAD] has held it is clear that any input/input services contained in any by- product/waste/refuse, Cenvat Credit cannot be varied or denied. With this statutory clarification demand under Rule 6 in respect of by-product is not applicable. This issue has been considered in various judgments as cited by Learned Counsel. Once it is established that the product in question is by-product then it is settled that in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Sulphuric Acid being a by-product, no demand under Rule 6 shall sustain. Thus, sulphuric acid which is an unintended by-product, has further been used by the appellant for manufacture of phosphoric acid and the same has further found use in the manufacturing of Di-Ammonium Phosphate (DAP) which is chargeable to 1% rate of Central Excise duty as provided in Notification No. 12/2012-CE dated 17.03.2012 - Since the Di- Ammonium Phosphate (DAP) has been manufactured by utilizing a product which has emerged as unintended by-product, following the various legal pronouncements including the Hon ble Supreme Court decision in the case of BIRLA CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2005 (7) TMI 104 - SUPREME COURT] and in the case of Commissioner vs. Sterling Gelatin [ 2015 (10) TMI 557 - SC ORDER ], it is held that even after the amendment to Rule 6 by Notification No. 6/2015-CE dated 01.03.2015, so far as demand of Cenvat credit pertaining to use of sulphuric acid/phosphoric acid for manufacturing Di-Ammonium Phosphate (DAP) is not sustainable. Since the impugned order-in- original has not specifically mentioned the use of any input service on which Cenvat credit has been taken by the appellant while manufacturing and clearing Di-Ammonium Phosphate by the appellant and if so, he has to re- calculate the demand of Cenvat credit giving benefit of the fact that appellant is entitled not to reverse Cenvat credit on the inputs which have been availed on the copper concentrate while manufacturing various copper products. Conclusion - Sulphuric Acid being a by-product, no demand under Rule 6 shall sustain. The Adjudicating Authority has to segregate the demand of Cenvat credit into two segments, one which has been demanded on the primary inputs namely copper concentrate etc. and second, the demand on the use of common input and input services which have gone into manufacture of exempted DAP - matter remanded for fresh adjudication on the above terms - The appeals are allowed by way of remand. Case-Laws Central Excise Mon, 15 Jul 2024 00:00:00 +0530