TaxTMI 
TaxTMI 
2019 (2) TMI 570
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....The appellant also avails the credit on various inputs received on behalf of M/s SEL. The case of the department is that since, the appellant have availed cenvat credit on certain inputs which were used exclusively in the manufacture of exempted goods manufactured on job work basis, the appellant is not entitled for cenvat credit on the inputs used exclusively for exempted goods. Therefore, the issue involved in the present case is that whether the appellant can avail the cenvat credit on duty paid on various inputs received by them in the course of undertaking exempted job work activities and pay 6% / 8% amount under Rule 6(3) of Cenvat Credit Rules, 2004 as they have allegedly used exclusively in course of production of exempted goods (Wind Mill Towers) only. The cenvat credit already reversed at the rate of 5% / 6% of the value of exempted goods was deducted from the total credit availed and the demand was raised for the balance amount. The demand of cenvat credit was raised for the period from October 2010 to June 2015. The SCN was culminated in the adjudication order whereby the demand of cenvat credit was confirmed and penalty under various Sections / Rules were imposed. Bein....
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....t of his submission, he placed reliance on the following judgment:- • Bongfiglioli Transmissions Pvt. Ltd. 2015 (223) ELT 470 • Bonfigloli Transmissions Pvt. Ltd. 2015 (317) ELT 214 • Escorts Ltd. 2015 (322) ELT 325 (P&H) • Nav Bharat Impex 2012 (285) ELT 582 (Tri. Del.) • Kaynes Technology India P. Ltd. 2019 (1) TMI 44-CESTAT • Mercedez Benz India (P) Ltd. 2015 (40) STR 381 • IIFCO 2013 (287) ELT 467 (Tri. Amd.) • IIFCO 2014 (305) ELT 49 (Guj.) 4. He also submit that very same controversy though raised in the past was investigated and concluded without raising any demand as evident from the record. The revenue authorities had raised series of demands from time to time and majority of the material period is already covered vide the same wherein while 6% or 8% payment methodological was approved, however it was alleged that the value adopted for payment of 6% / 8% was undervalued. These proceeding were also recently concluded in favour of the appellant vide CESTAT Final Order No. A/10059-10066/2019 dated 10.01.2019. He submits that under the circumstances, the Revenue authoriti....
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.... in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, except inputs intended to be used as fuel, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely:- (i) The manufact....
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.... As regard the explanation (ii) given in sub Rule (3) of Rule 6, we are of the view that this explanation applies only in such cases where the exempted goods is manufactured wholly from the inputs which are exclusively used in the manufacture of such exempted goods. However, in the present case some of the inputs are common which were used in the manufacture of dutiable final product as well as exempted goods, therefore, the explanation II is not applicable in the present case. Moreover, the explanation II is applicable only with reference to Rule 6(2), however the appellant have not opted for said Rule and they have opted for sub Rule (3) of Rule 6 wherein unambiguous provision for payment of 6% / 8% of the value of exempted goods is provided. 8. Without prejudice to our above observation, even if the contention of the Revenue is accepted then also the demand of cenvat credit in the present case shall not sustain for the reason that out of the inputs supplied by SEL. which department considered that the same was used exclusively in the exempted goods. Were equally contained in the waste and scrap which is also an excisable goods and cleared on payment of duty. Therefore, it is ....
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....said order is as under: "32. The next issue now to be decided is whether in terms of existing Rule 6(2), once it is an admitted fact that common inputs are being used in the manufacture of dutiable and exempted products, whether the appellants are eligible to take credit even in respect of non-common inputs i.e. inputs which exclusively go into the manufacture of exempted final products. We find that this issue has been dealt at length by the Tribunal in the case of Hetero Labs Ltd. (cited supra) and followed in other decisions in the case of Koya & Company, Indian Hume Pipe, Escort Limited, Kumbhi Kasari SSK Ltd. and in all these decisions it has been held that the credit will be available even on non-common inputs used exclusively for the manufacture of exempted final products. We find no reason to differ with the same except for the fact that Explanation III has been added to Rule 6(3) of the Cenvat Credit Rules stating that the credit cannot be taken in respect of inputs exclusively used in the manufacture of exempted final products. Here also we are in agreement with the plea taken by the appellants that Notification 27/2005 under which the explan....