TaxTMI 
TaxTMI 
TaxTMI 
2020 (11) TMI 490
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....ellant is clearing Urea and SSP @ 1% ADV., being fertilizer exempted in terms of Sl.No.128 of Notification no.12/2012 dated 17.03.2012. 3. The main input of the appellant is compressed natural gas (CNG). From the compressed natural gas, the appellant manufactures ammonia, which is an intermediate product. Ammonia is further processed along with other inputs to manufacture urea. Ammonia is an important input, without which the manufacture of urea is not possible. Major quantity of Ammonia, an intermediate product is being captively consumed for the manufacture of urea. A part of surplus Ammonia, sulphur, was cleared on payment of duty. The captive consumption of Ammonia is exempt from payment of duty under Sl.No.86 of Notification No.12/2012. 4. In such manner, the appellant is clearing dutiable finished goods- Ammonia and exempted finished goods being Urea/SSP. The appellant was not maintaining separate accounts for input/input services received with respect to the exempted and dutiable final products. The appellant opted under Rule 6(3)(ii) read with Rule 6 (3A) for reversing the proportionate credit attributable to the clearance of the finished exempted goods. The appellant com....
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....ural gas) are put to use firstly for the manufacture of Ammonia and thus, for the determination of the proportionate credit, only the value of the dutiable Ammonia and exempted Ammonia ought to have been taken. 10. It is further the case of the Revenue that as the demand raised by the Department, whereby subsidy amount was sought to be included in the value of the Urea/SSP, while reversing the proportionate credit has been dropped, there is no estoppel from raising the demand for the subsequent period when the new facts were noticed by the Department. 11. A similar show cause notice dated 8.3.2018 on the same allegation was issued for the subsequent period i.e. Feb., 2016 to March, 2016, demanding reversal of cenvat credit amounting to Rs. 33,76,576/-. 12. Both the show cause notices were adjudicated by the separate order-in-original dated 20.07.2018, whereby the Dy. Commissioner confirmed demands, observing that since the input services were utilised for the manufacture of Ammonia, only the value of the Ammonia is to be taken to compute the amount of credit admissible to the appellant and not by taking the value of the Urea, which has been manufactured subsequently, for which n....
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....provides, "for the purposes of this rule, exempted goods or final products, as defined in clauses (d) and (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. Further, Explanation 2 reads as, " value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the Rules made thereunder. Further, it is urged referring to sub-rule 6(2), which provides that, "Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services 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 in respect of such input services used for the manufacture of the dutiable goods and exempted goods. Rule 6(3) provides, "option to the manufacturer not to opt for maintenance of separate records, or is unable to maintain such records, wherein one....
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....applied only in relation to sale and clearance of final products i.e. P.D. Pumps, which are exempted from payment of duty, thus, over-riding the legal provisions? 21. The Hon'ble High Court observed that admittedly the exempted final products are monobloc or PD Pumps and not CI castings. In order to escape, the assessee as though cleared only CI castings. Such contention was rejected by the First Appellate Authority by specifically going into all the facts and materials placed before him. Further, observed that the Tribunal did not work out on the factual aspect of the matter. The Hon'ble High Court relied on the ruling of the Hon'ble Supreme Court in the case of CCE, Nagpur Vs. Ballarpur Industries Ltd. - 2007 (8) SCC 89, wherein on the similar issue, it was held that 8% duty is liable to be paid by the assessee, who had not complied with Rule 57CC (9), on the value of the exempted goods at the time of clearance from the factory gate. 22. The Hon'ble High Court further observed that the counsel for the assessee placing reliance on the Larger Bench decision of the Tribunal in the case of Texmo Industries - 2007 (208) ELT 338 contended that even in that case they have not maintain....
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.... in the value of the urea, which is not acceptable as subsidy is allowed on the value of urea and this subsidised portion is reduced from the price, which results in reduction of the value of all the inputs/input services and other expenses and thus, the actual value of ammonia is not reflected in the value of such subsidized urea. 28. Accordingly, the Revenue is justified in valuing the Ammonia for the purpose of calculating the amount of reversal of ineligible cenvat credit. 29. Accordingly, ld. Authorised Representative for Revenue prays for dismissing the appeals. 30. Having considered the rival contentions, I find that the Revenue is trying to stretch the law in disregard to express provisions of the Act and the Cenvat Credit Rules. I find that Rule 6(3)(i) provides for payment of an amount equal to 6% of value of the exempted goods and 7% of value of the exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for............................................................... 31. It is further provided under Rule 6(3A) (b) to apply the standard formula for calculating the amount to be reversed or the ineligible Cenvat....