TaxTMI 
TaxTMI 
2014 (12) TMI 658
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....6(1) of CENVAT Credit Rules 2004? (3) Whether on facts and in the circumstances of the case, the CESTAT is right in applying the ratio of judgment in the case of Hetero Labs Ltd., v. Commissioner of Central Excise, Hyderabad 2005 (192) ELT 716 (Tri.Bangalore) where the facts involved are entirely distinct and different from the facts of the instant case and when the said decision has not reached finality?'' 2. The first respondent-assessee are engaged in the manufacture of gear motor assembly falling under chapter heading 85.01 of the Central Excise Tariff and they supply the said gear motor assembly to M/s NEPC India Limited, Chennai for being used in their wind mills. The gear motor assembly is manufactured by way of assembling 19 imported components. The first respondent is also manufacturing gear motor assembly for other general applications for usage by other customers and for such gear motor assemblies cleared for other customers, duty is paid. So far as the supply of gear assembly to M/s NEPC India Limited, Chennai is concerned, the said manufactured and cleared goods are exempted from duty in terms of the Notification No.3/2001 dated 1.3.2001 and Notification ....
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....;'1. I confirm an amount of Rs. 88,21,936/- (Rupees eighty eight lakhs twenty one thousand nine hundred and thirty six only) out of Rs. 88,59,661/- and an amount of Rs. 1,19,128/- (Rupees one lakh nineteen thousand one hundred and twenty eight only) as Education Cess demanded vide show cause notice No.86/2005 dt. 16.12.2005), being the undue credit availed during the period from 1.7.2001 to 29.11.2005 and I also confirm an amount of Rs. 34,31,162/- (Rupees thirty four lakhs thirty one thousand one hundred and sixty two) and an amount of Rs. 68,623/- (Rupees sixty eight thousand six hundred and twenty three only) as Education Cess, being the undue credit availed during the period from 30.11.2005 to 31.10.2006, issued vide this office file references of even no., under Rule 12 of Cenvat Credit Rules, 2001 / 2002 and Rule 14 of Cenvat Credit Rules read with proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944. 2. I order payment of appropriate interest on the above amount demanded, under Section 11AB of the Central Excise Act, 1944. 3. I impose a penalty of Rs. 1,24,40,849/- (Rupees one crore twenty four lakhs forty thousand eight hundred and forty nine ....
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....nces mentioned in sub-rule (2). (2) Where a manufacturer (or provider of output service) avails of CENVAT credit in respect of any inputs (or input services), except inputs intended to be used as fuel, and manufactures such final products (or provides such output service) which are chargeable to duty or tax as well as exempted goods (or services), then, the manufacturer (or provider of output service) shall maintain separate accounts for receipt, consumption and inventory of input (and input service) meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods (or services) and take CENVAT credit only on that quantity of input (or input service) which is intended for use in the manufacture of dutiable goods (or in providing output service on which service tax is payable.) (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer (or the provider of output service), opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely:-- (a)....... (i) to (vii)..... (b) if the exempted good....
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....b-rule (3) of Rule 6, which was added vide Notification No.27/2005-C.E.(N.T.) dated 16.5.2005, and the same reads as follows:- ''Explanation III. For the removal of doubts, it is hereby clarified that the credit shall not be allowed on inputs and inputs services used exclusively for the manufacture of exempted goods or exempted services.'' 8. We have also noticed that the Tribunal relied upon the decision in Hetero Labs Ltd., v. Commissioner of Central Excise, Hyderabad [(2005) 192 ELT 716)] (Tri.Bangalore), where an identical claim was made under the erstwhile Central Excise Rules to clarify that the CENVAT credit shall not be allowed for inputs used exclusively in the manufacture of exempted goods and held that in the present case, Explanation III will not get attracted. Rightly so, because Explanation III did not override Rule 6(3)(b), as it only clarified that credit will not be allowed on inputs used exclusively in the manufacture of exempted goods, which is not the fact in the present case, as has been found by the Tribunal that the inputs viz., Serial Nos.1 to 16 had been used in the manufacture both in respect of exempted goods as well as goods cleared....