TaxTMI 
TaxTMI 
2016 (11) TMI 140
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.... exports without payment of duty under Letter of Undertaking. b. The Department issued a show cause notice alleging that since there is no manufacture, there is no duty liability on the aforesaid minerals ( finished products) and hence the availment of CENVAT Credit and payment of duty on the mineral by utilising CENVAT Credit for domestic clearance and for export under claim for rebate and subsequent sanction therefore appears to be erroneous. The show cause notice therefore proposed to treat CENVAT Credit of Rs. 4,59,05,807/- taken for the period September 2009 to March 2011 as having been taken wrongly and also proposed that CENVAT Credit of Rs. 1,41,58,285/- lying in balance should lapse (not to be utilized at all) as the same pertains to the period during which the activities undertaken by the appellant does not amount to manufacture. c. The Adjudicating authority passed the Adjudication Order dated 28.03.2012 and held that as the process does not amount to manufacture, there is no duty liability on the final products i.e., mineral concentrates and confirmed the proposals in the SCN Hence this appeal. 2.1 . On behalf of the appellant Ld Counsel Shri Ashok Desh P....
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....CENVAT credit of Rs. 4,59,05,807/- taken by appellants on inputs, capital goods and input services during the period September 2009 to March 2011 is legal and proper. However, since the process of conversion of ores to concentrates is manufacture as per the Chapter Notes (CETA, 1985) from 2011 onwards, the appellants are eligible to avail CENVAT credit from this date (31/03/2011). 4. Heard both sides and have also gone through the facts and records of the case. 5. In our view, the issues that need to be considered are three fold, namely: a) Whether the process carried out by the appellants results in manufacture of an excisable product; b) In case there is no manufacturing involved, whether CENVAT Credit already utilized for payment of duty on final products can be denied or required to be reversed, c) After such payment of duty through CENVAT account, whether credit lying in balance will lapse, 6.1. Coming to the first issue, it is seen that the process carried out by appellant of separating valuable mineral sands from ordinary sea sand, as per their own admission vide letter 03.08.2011 involves the following. i. Feed preparation stage, where oversize d....
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.... (ii) Factories Act, 1948 respectively. After separation, the items are sent to their other unit where separate processes takes place and for removal of those goods, duty is being discharged. The duty at the present stage of mere separation of the three items will not lead to bringing into existence a new product as there is no chemical change taking place. He submits that the judgment of Indian Rare Earths Ltd. is not distinguishable. 4. The learned JDR pointed out that the judgment of Indian Rare Earths Ltd IS distinguishable as in that case, the rare mineral sand was dredged out by physical and mechanical process from ordinary sand into concentrated ores and they were held to be not by a process of manufacture as the chemical structure remained the same. However, he submits that 117 this case, the ores are brought by magnetic, electrostatic and gravity process to bring into existence minerals like illmenite, Rutile and Zircon. They have to be classified under the respective headings and charged to duty by denying the benefit of the exemption notification. He submits that the findings recorded by the Commissioner (Appeals) is justified. 5. We have carefully considered the s....
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....sed credit, appellant defends this raising the contention that utilisation of CENVAT credit was not questioned by department and that there is no provision in law for 'lapsing of credit' applicable to their case. In our view, appellants are wrong on both counts. The adjudicating authority may have very well conceded the non-recoverability of CENVAT credit utilised for payment of duty, and rightly so, as discussed above, but that does not i so facto enable the appellant to hold on to unutilised credit which was not legally permitted to be availed Secondly, the CENVAT Credit Rules 2004 does contain a provision, is Rule 11 (3) thereof, to cover this very situation, as will be seen from the reproduction which follows. (3) A manufacturer or producer of final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of Inputs received for use in the man ufacture of the said final product and IS lying in stock or in process or is contained in the final product lying in stock, if,- i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notifica....