2016 (10) TMI 651

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....ere availing Cenvat credit on input and input services. They were also paying service tax on transportation of goods  inputs as well as final products and were also availing Cenvat credit on such service tax. The demand made in the impugned order is to the extent of Rs. 3,19,48,674/- along with interest and equal amount of penalty under Rule 6(3)(b) read with Rule 14 of Cenvat Credit Rules, 2004. This demand is made on two allegations. (i) The appellant procured iron ore which is used as input in the manufacture of sponge iron, which is cleared on payment of duty. During the manufacture of sponge iron, there arises another product known as Iron Ore Fines , which is cleared without payment of duty because there is exemption from paymen....

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....erse 10% of the value of the exempted goods in terms of Rule 6 (3) ibid. They have cited the following case laws in their support:- (i) Union of India Vs. Hindustan Zinc Ltd. [2014 (303) ELT 321 (SC) (ii) Rallis India Ltd. Vs. Union of India [2009 (233) ELT 301 (Bom.)] (iii) CCEST, Raipur Vs. Aarti Sponge & Power Ltd. [2016 (333) ELT 415 (Tri-Del)] On the second allegation regarding the electricity, they have argued that electricity cannot be considered as an excisable goods as defined in Section 2(b) of the Central Excise Act, 1944 in-as-much-as no rate of duty has been prescribed for electrical energy. The electricity cannot be categorised as exempted goods also since there is no exemption Notification granting such exemption. They....

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....the use of common input services for dutiable and exempted products. In the impugned order, the Commissioner is of the view that the appellant had cleared two final products, i.e., one dutiable (sponge iron) and the other exempted (iron ore fines). For failure to maintain separate accounts, the appellant was held liable to pay 10% of the value of iron ore fines cleared in terms of Rule 6 (3) (b) of the Cenvat Credit Rules, 2004. Ld. counsel for the appellant cited the following case laws and has argued that there is no need for reversal of 10% in the case of waste or by-product:- (i) CCE Vs. Solaris Chemtech Ltd. [2007 (214) ELT 481 (SC). (ii) Ballarpur Industries Ltd. Ltd. Vs. CCE, Nagpur [2006 (205) ELT 483 (Tri.-Mum)] We have gone t....