TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1335
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....evity), inasmuch as they have manufactured the dutiable as well as exempted product with common inputs, but failed to maintain a separate account for common input. The assessee have cleared 1705.984 MT of DCT (exempted goods) chargeable to Nil rate of duty falling under Chapter sub-heading 27060010 of CETA valued at Rs. 28,525,535/- during the period from 16th May, 2005 to March 2007without payment of duty Rs. 2,852,553.50 an amount equal to 10% of the total price of exempted goods cleared from the factory in terms of Rule 6(3)(b) of CCR, 2004. 3. In terms of the provisions of Rule 6(2) of CCR amended vide Notification No. 27/2005 dated 16.5.2005, if an input including fuel used in the manufacture of dutiable as well as exempted goods, the manufacturer shall maintain separate account of receipt, consumption and inventory of input intended for use in the manufacture of dutiable as well as exempted product. However, the assessee had failed to maintain separate account of receipt, consumption and inventory of input, i.e. furnace oil. Thus, as per Rule 6(3)(b) of CCR, the assessee is required to reverse the amount @ 10% of the value of exempted product i.e. DCT, it has not been done ....
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....led in the condition of final product i.e. DCT, wherein, the said intermediate product i.e. smoke/flue gas is being used. Accordingly, Revenue was of the opinion that the reliance was placed on the said circular is not correct and the only provisions required to be relied upon is one which is laid down in Rule 6(3)(i) and (ii) of the said Rule in the present context. 5. With effect from 16.5.2005, Cenvat credit was allowed on fuel. Since then the said assessee started to avail the credit of Furnace oil/CBFS/Creosote Oil which is used as fuel for firing of burners fitted in four tanks for generating heat and raising high temperature for the manufacture of dutiable CTP. In the same line, high temperature is also required for the manufacture of non-dutiable DCT and for obtaining such high temperature the assessee are dependent on the heat generated only by burning fuel at those tanks meant of Coal Tar Pitch. Difference between both is that the tanks for dutiable 'Coal Tar Pitch' receive heat directly from the flame whereas tank for exempted DCT from the hot gases/smoke emerged during such flaming. In both cases, presence of flame is required which is obtained only by firing of burne....
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....f the respondent submits as under : (a) Demand has been confirmed on the ground that the respondent was utilising common input i.e. furnace oil as fuel for the manufacture of dutiable and exempted goods but was not maintaining any separate accounts of the inputs meant for use in the manufacture of dutiable and exempted product. Hence, the respondent was required to pay 10% of the amount of the sale value of exempted viz. DCT under Rule 6(3)(b) of Cenvat Credit Rules. (b) The respondent submits that it did not use any fuel or any other duty paid common input for making dehydrated coal tar in tank No. 4 had been confirmed by the technical inspection report obtained by the Revenue from an independent technical export i.e. M/s Mecon Ltd. (Government of India Undertaking) who in its report at para 3: "at page 3 of the Report, M/s Mecon Lted. has given the description of the respondent's process of production as under: i) Process description: Plant is processing crude coal tar through batch distillation in horizontal tanks to produce wide range of tar products. There are five (5) distillation tanks namely 1, 2, 3, 4 & 5. Distillation tanks no. 4 is installed only for the pro....
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....indirectly." 12. This is further substantiated by the subsequent clarification reiterated at para 3.7 of Chapter 5 of CBEC Manual of Supplementary Instructions. The said paragraph is as under : "Cenvat credit is also admissible in respect of the amount of input contained in any of the waste, refuse or by-product. Similarly, Cenvat is not to be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The basic idea is that Cenvat Credit is admissible so long as the inputs are used in or in relation to the manufacture of final products and whether directly or indirectly." 13. It was also contended by the ld. Advocate on behalf of respondent that the following cases, Hon'ble Tribunal has held that the ratio of the judgements rendered under Rule 57CC will be equally applicable under the provisions of Rule 6 of the Cenvat Credit rules, 2004: (i) Sai Sulphate (P) Ltd. Vs. CCE - 2017 (345) ELT 156 (Tri.-Kolkata); (ii) A.R. Sulphonates Pvt. Ltd. Vs. CCE - 2016 (344) ELT 363 (Tri.-Mumbai); (iii) J.S.W. Steel Ltd. Vs. CCE - 2016 (332) ELT 189 (Tri.-Mumbai); (iv) P.C.C. & ST Vs. Barmalt India Pvt. Ltd. ....
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....manufacture of non-excisable goods would not attract provisions of Rule 6 as the definition of exempted goods would not cover non-excisable goods. Thus, Rule 6 seems to have no applicability for reversal or recovery of credit on raw material, consumables and input services used for production or manufacture of non-excisable goods 17. It was also argued that with effect from 1.3.2015 by Notification No.6/2016-CE(NT) dated 1.3.2015 explanation in Rule 6(1) was inserted with effect from 1.3.2015. Explanation 1 reads as under: "Explanation 1. - For the purposes of this rule, exempted goods or final products as defined tin clauses (d) and (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory." This position was also clarified by Circular No. 1027/15/2016- CX. dated 25.4.2016. 18. In view of above the respondent submitted that the Revenue's appeal has no merit and deserve to be set aside with consequential benefit to the appellant as the period involved is from 16.5.2005 to 31.3.207, which is prior to amendment of Rule 6(1) of Credit Rules. 19. We have considered the rival contention and also perused the appeal record. We find that the is....