2018 (2) TMI 1312

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.... Rajkot. 2. Briefly stated the facts of the case are that the appellant were engaged in manufacture of excisable goods, namely, Face Veneer, Core Veneer, Plywood and Sawn Wood. During the scrutiny of the returns, it was observed that the appellant during February, 2011 to October 2011 had though used common input, namely, wooden logs on which cenvat credit of SAD was availed, used the said input in the manufacture of finished goods and also exempted goods but failed to maintain separate records for consumption of inputs in the manufacture of dutiable goods and exempted goods and also failed to discharge 6% of the value of the exempted goods under Rule 6(3) of Cenvat Credit Rules, 2004. Demand notice was issued to them on 29.11.2013 for r....

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....firming demand on wooden rollers which emerges as a by-product during the course of manufacture of the finished goods as held in the impugned order. 4. Ld. AR for the Revenue reiterated the grounds of appeal. Further, he has submitted that since these goods are emerging during course of manufacture and has a commercial value, therefore, these products being exempted from payment of duty hence Rule 6(3) of Cenvat Credit Rules, 2004 has been rightly invoked in the present case. Further, he has submitted that the wooden rollers, in any case, are distinct product, should be subjected to the Provisions of Rule 6(3) of Cenvat Credit Rules, 2004 as held by the Ld. Commissioner (Appeals). 5. Heard both the sides and perused the records. 6.....

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.... the entire quantity of input viz. Hydrochloric Acid is used in the manufacture of the final product being Gelatin which is a dutiable product, the mere fact that a by-product emerges during the process would not bring the by-product within the ambit of Rule 6 of the Rules so as to call for maintaining separate accounts in respect of the same. When the entire quantity of input is used in the manufacture of Gelatin, the question of maintaining separate accounts or of paying a percentage of the total price of the exempted goods would not arise. In the peculiar facts of the present case, sub-rule (1) of Rule 6, itself would not come into play inasmuch the manufacturer does not deliberately use any quantity of the inputs, viz. Hydrochloric Acid....