TaxTMI 
TaxTMI 
2016 (1) TMI 884
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....d 1.3.2006 and accordingly slag dust was cleared at nil rate of duty. The period of dispute in this case is from 2009-10 to 2011-12. The appellant were availing cenvat credit of duty paid on sponge iron and other inputs/input service. The department was of the view that since the appellant were using common inputs in relation to manufacture of dutiable goods (M.S. Ingots) and exempted goods (Slag dust) and they are not maintaining separate accounts for inputs/input services used in the manufacture of dutiable goods and exempted final products, in respect of clearance of slag dust an amount of 5% of the sale value of the slag dust cleared at nil rate of duty would be payable under Rule 6(3) of the Cenvat Credit Rules, 2004. It is on this bas....
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....the background of similar facts involving an identical issue, it has been held that provision of Rule 57 CC would not be applicable in respect of mother liquor arising in the manufacture of gelatine, that the same view has been taken by Hon'ble Gujarat High Court in the case of CCE Vs. Nirma Ltd. - 2012 (281) ELT 654 (Gujarat) wherein the High Court has held that when the entire quantity of input was used in the manufacture of a dutiable final product and an exempted by-product emerges during the process of manufacture, there was no question of maintaining separate accounts or paying a percentage of total price of the exempted by-product, that the apex Court in the case of Hindustan Zinc Ltd. Vs. Union of India - 2014 (303) ELT 321 (SC)....
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....ppellant are manufacturer of M.S. Ingots from sponge iron. In the course of manufacture of M.S. Ingots, slag dust arises which is waste and the same is fully exempt from duty under notification no.4/06-CE dated 1.3.2006. The Department's case against the appellant is that since the cenvat credit availed inputs have been used for manufacture of dutiable and exempted final products and since the appellant have not complied with the provisions of sub-rule (2) of Rule 6, the provisions of sub-rule (3) of Rule 6 of Cenvat Credit Rules, 2004 would be applicable and invoking clause (i) of-Rule 6(3), an amount of 5% of the total sale value of the slag dust cleared at nil rate of duty has been demanded. 6. In terms of sub-rule (2) of Rule 6, wh....
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.... sub-rule (2) are not complied with by a manufacturer. In this case, in course of manufacture of MS Ingots, slag dust arises as an inevitable by-product and in the present case, even if manufacturer, in accordance with the provisions of Rule 6 (2), wants to maintain separate account or inventory of inputs/input services used in the manufacture of dutiable product - MS ingots and take credit only in respect of inputs and inputs services used in the manufacture of MS ingots, this is impossible a slag emerges as an inevitable and unavoidable by-product. Separate account and inventory as per the provisions of Rule (2) can be maintained only when a manufacturer using common inputs/input services consciously manufactures final products one dutiab....