AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2568
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....namely refined edible oil, was exempt from payment of duty. But, by a notification issued on 01.3.2003, the main final product, namely refined edible oil was made subject to duty. 4. However, it is an admitted fact that in the course of manufacture of the main final product, the appellant was also producing certain by-products such as "soap stock" and "wax". Therefore, the appellant claimed CENVAT Credit in terms of Rule 6(4), with effect from 01.3.2003, namely the date on which the main final product, namely refined edible oil became subject to duty. 5. However, a show cause notice dated 07.4.2004 was issued, alleging that the appellant was not entitled to CENVAT Credit on the capital goods, due to the fact that on the date of receipt of the capital goods, the goods were exempt from payment of duty. Insofar as the by-products are concerned, the show cause notice alleged that they constitute a very negligible percentage of the main final product manufactured by the appellant. 6. The appellant gave a reply dated 03.9.2004 and it was followed by a personal hearing on 14.10.2004. But, by an order-in-original passed on 15.02.2005, the Commissioner of Central Excise, reversed the inp....
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....n amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year: Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if the said capital goods are cleared as such in the same financial year. (b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, if the capital goods, other than components, spares and accessories, refractories and refractory materials and goods falling under heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Tariff Act, are in the possession and use of the manufacturer of final products in such subsequent years. " 10. It may be seen from a bare perusal of Rule 4(2) that the Rule speaks about (i) the circumstances under which a person is entitled to CENVAT Credit, and (ii) the manner in which such CENVAT Credit shall be availed. In its plain language, the said Rule does not talk about the date on which CENVAT Credit has to be taken, except indicating that CENVAT Credi....
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....refractory materials; (vi) tubes and pipes and fittings thereof; and (vii) storage tank, used in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office;" 15. Fortunately, there is no dispute in this case as to whether the goods received by the appellant were capital goods or not. It is an admitted fact that the appellant received capital goods during the period from April 2002 to March 2003. Therefore, with the accepted position that what was received by the appellant were capital goods, let us see what a final product is. 16. The expression "final product" is defined in Rule 2(e) to mean excisable goods manufactured or produced from inputs. What is clearly decipherable from the use of the expression "final product" and the definition of the expression "final product" is that the Rules do not make a distinction between a main product and a by-product. The Rules speak only about final products and not about main product or by-product. 17. Even in the show cause notice dated 07.4.2004, the Commissioner of Excise had admitted in paragraph 5.1 that certain by-products such as soap stock and wax get manufactured ....
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....ld Modvat Rules. As we have stated earlier, the focus of the old Rules was actually on the date of receipt of the goods. In any case, Rule 6(4) never fell for consideration in Binani Cements Ltd. 22. Insofar as the decision in Grasim Industries Ltd. is concerned, the Tribunal was concerned in that case with an import made under the Project Import Scheme, in the context of Rule 57R. Therefore, the said decision followed the decision in Binani Cements Ltd. and hence, would have no application to the case on hand. 23. In Commissioner of Central Excise v. Saurashtra Chemicals Ltd. [2007 (212) ELT 7], the Supreme Court took note of the fact that under Rule 57Q (3), the manufacturer of a final product was entitled to credit of additional duty leviable under the Customs Tariff Act, 1975, on certain goods up to the extent of 75% of the additional duty. But, Rule 57Q was replaced by Rule 57AC with effect from 01.4.2000. These Rules permitted Cenvat Credit both in respect of inputs as well as in respect of capital goods, received in a factory, up to 50% in the same financial year in which the goods were received and the balance 50% in the subsequent financial year. But, the Supreme Court h....
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....-03. The main final product, namely refined edible oil was exempt from payment of duty only up to 28.02.2003 during the financial year 2002-03. The goods became dutiable with effect from 01.3.2003. Additionally, all the three by-products were not exempt from payment of duty during any part of the financial year 2002-03. Rule 4(2)(a) is not worded as follows: "CENVAT Credit shall be availed with reference to the date of receipt of the capital goods." The Rule simply states that CENVAT Credit shall be availed in respect of capital goods received in a factory at any point of time in a given financial year. In other words, if a factory is manufacturing goods which are dutiable, the date on which a person receiving capital goods is entitled to claim CENVAT Credit, is left to his choice. He is entitled to take any date within the financial year subject only to the first condition imposed under Rule 6(4), namely that on the date on which he avails credit, the goods to be manufactured out of them should not be exempted goods. This is the proper manner of construction of Rule 4(2)(a) and 6(4). 27. The consequences of giving a different interpretation to the Rule is too obvious. Take for....