2012 (12) TMI 469

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....nsisting of zinc metal and zinc ash is formed. The period of dispute in this case is from December, 2006 to 1-5-2008. During this period, while galvanized Iron and Steel strips were being cleared on payment of duty, the zinc dross was being cleared without payment of duty in view of Hon'ble Supreme Court's judgment in case of Indian Aluminium Co. reported in 1995 (77) E.L.T. 268 (S.C.) as a non-excisable product. Since Cenvat credit in respect of common inputs used in manufacture of galvanized Iron and Steel strips and zinc dross had been taken and no separate account and inventory of the inputs being used in the manufacture of dutiable final product - (galvanized iron and steel strips) and non-excisable zinc dross could be maintained, the ....

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.... the consent of both the sides, the matter was heard for final disposal. 3. Shri Navin Mullick, Advocate, the learned Counsel for the Appellant, pleaded that zinc dross emerges as an unavoidable and inevitable waste in course of galvanization of iron and steel products and, therefore, it is impossible for an assessee to maintain separate account and inventory of inputs meant for dutiable final products (galvanized iron and steel products etc.) and non-excisable zinc ash dross, and, hence, the provisions of Rules 6(2) and 6(3) are not applicable, that since zinc dross is non-excisable, the same is not covered by the definition of 'exempted goods' as, as given in Rule 2(d) of Cenvat Credit Rules, 2004, 'exempted goods', have to be exc....

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....redit Rules are applicable only when a manufacturer avails Cenvat credit in respect of any input or input services and uses such inputs and/or input service in respect of final products chargeable to duty as well as "exempted goods". Rule 6(1) provides for disallowing the Cenvat Credit in respect of the quantity of inputs and/or input service used in manufacture of "exempted goods". The term- "exempted goods" as defined under Rule 2(d) of Cenvat Credit Rules, means - "excisable goods which are exempt from the whole of the duty of excise leviable therein and includes goods which are chargeable to "nil" rate of duty". Thus, the exempted goods have to be "excisable goods" first. In this case, there is no dispute that during the period of dispu....

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.... in proportion to the value of non-excisable by-product or waste. 7. Another point raised by the Appellant is regarding time bar. The period of dispute in this case is from 19-12-2006 to 1-5-2008. The date of show cause notice is 26-8-2009. The show cause notice would be within time limit only if extended period under proviso to Section 11A(1) is available for which it has to be proved that non reversal of proportionate Cenvat credit was due to wilful mis-declaration, fraud, suppression of facts, etc. on the part of the Appellant. But these allegations can not be made against the appellant as 2nd para of the show cause notice reads as under - "Whereas during the course of Audit of records of the said party for the period 2005-07 ....