TaxTMI 
TaxTMI 
2019 (8) TMI 1172
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....avail CENVAT Credit under CCR 2004. A show cause notice dated 19.11.2010 was issued to the appellants by the Revenue seeking to disallow CENVAT Credit on capital goods availed by them on the following items on the ground that as per Rule 6(4) of CCR 2004, no CENVAT Credit shall be allowed on capital goods which are used exclusively for the manufacture of exempted products: i) Decanter for Gluten ii) CPD (Flash Dryer) used for drying the Gluten. iii) Tubular Dryer or Rotary Dryer used for drying maize fibre/Germ taken by them during the period November 2007 to April 2008. 3. It has been alleged in the show cause notice that the appellants manufacture both dutiable as well as exempted products. While starch is a dutiable product, Gluten, maize fibre and Germ are exempted products. In the manufacturing process, starch gets separated from the maize at some stage beyond which the other exempted products are also processed and packed and sold. As per Rule 6(4) of CCR 2004, no CENVAT Credit shall be allowed on capital goods which are used exclusively for the manufacture of exempted goods and on verification by the Department it was found that the appellant ha....
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....ses through different separation equipments like Main stream Thickner, Primary Separator, gluten Decanter. During separation of Starch and Gluten (Protein), the Gluten has very low solid content approximately 2 - 3%, without Gluten Decanter they cannot concentrate the Gluten and run the plant. After concentration of liquid Gluten, it goes through the vacuum filter for further reducing the moisture and left over liquid contains fine Gluten and again it goes to the main process for recovery. Finally semi wet Gluten (Protein flour) obtained from the vacuum filter 60% moisture content Gluten goes to the CPD Flash dryer and obtained final moisture 10% and packed. After vacuum filter gluten cake moisture is 60%, as protein (Gluten) is perishable product we have to dry through CPD Flash Dryer to achieve moisture 10%. Starch Separation: Finally they get the liquid Starch and this will go through nine different stages for better refining and starch liquid passes through centrifuge machine and finally dry it through the dryer and get Native Starch. Centrifuge overflow and filtrate water again goes to the main process. In modified starches they add....
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.... obtaining clean water from other process is a basic requirement for obtaining the finished excisable goods namely, starch. c) TUBULAR DRYER OR ROTARY DRYER USED FOR DRYING MAIZE FIBRE/GERM: Tubular Dryer or Rotary Dryer is used for drying of Maize Fibre/Germ. Drying of the products at both intermediate stage and also at dutiable goods stage are same and are part of the manufacturing process. In the above background the capital goods employed as above are eligible for availing CENVAT Credit on them as per the role played mainly in recovery of starch from the process material functions, rendered by each of the item as explained above." 8. After hearing, both sides were given one week to make additional submissions, if any. Accordingly, an unsigned copy of the written notes was sent by the Ld. Counsel which explained the process of manufacturing of various products and the equipment used at each stage, as follows: "The Maize seed contain 64% starch and the same is sought for recovery by employing the following: Processes carried out Nature of process Equipment used % of starch recovered REMARKS First Stage Cleaning Seed drum, seed cleaner,....
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....s sought to be denied is only the credit used on such goods which have been procured and used only for the processing of these exempted products after their separation from the main product. Therefore, the appellant is clearly not entitled to CENVAT Credit on these capital goods and they have wrongly availed CENVAT Credit with an intent to avail ineligible CENVAT Credit and accordingly the impugned orders are correct and require no interference. 10. I have considered the arguments on both sides and perused the records. The lower authority has explained the process lucidly. The disputed capital goods are used at the following stages. i) Decanter for Gluten - for Decanter for Gluten after separating free from the starch. Thereafter Gluten is done concentrating through vacuum filters and dried and packed. ii) CPD (Flash Dryer) used for drying the Gluten - it is used for drying gluten after it has been decanted in the Gluten Decanter. iii) Tubular Dryer or Rotary Dryer or Rotary Dryer used is used to squeeze the fiber to reduce the moisture content from 55% to 5% making it suitable for further processing and packing. 11. The case of Rana Sugar Limited (....