TaxTMI 
TaxTMI 
2021 (12) TMI 357
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.... Central Excise Tariff Act, 1985. During the relevant period, the Appellants were availing the benefit of Cenvat credit on inputs, input services and capital goods used in the manufacture of dutiable goods. The Appellants have a captive power plant (CPP) in their factory for generation of electricity, which in turn is used in the manufacture of finished goods. The Appellants used pet coke and furnace oil as fuel for the generation of electricity in the CPP. The pet coke and furnace oil are first used for generation of steam, which is further used for generation of electricity. A part of the steam generated is also used directly in the manufacture of soda ash. A part of the electricity generated from steam in the CPP is used by the Appellants in the soda ash plant and some part of the electricity is also supplied by the Appellants to the salt plant and residential colony. 2.1 Prior to 16.05.2005, the Appellants availed CENVAT/MODVAT credit of duty paid on entire amount of furnace oil and pet coke used in the generation of electricity at the captive power plant. Appellants were availing CENVAT credit on purchase of furnace oil and pet coke, used as fuel for generation of electrici....
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....pted goods) and residential colony, the CENVAT credit attributable to such quantity of furnace oil and pet coke was reversed at the beginning of the month itself and such reversal was duly indicated in monthly ER-1 returns. Another Show Cause Notice No. V.JMR/AR-Dwarka/COMMR/SCN-49/2006 dated 19.05.2006 was issued to the Appellants, proposing a total demand of Rs. 25,34,77,735/-, bifurcated as follows: (i) Demand of Rs. 22,41,76,788/- for the period 16.05.2005 to 15.05.2006, being 10% of the value of vacuum salt and iodized vacuum salt under Rule 6(3)(i) of CENVAT Credit Rules, 2004 on the ground that inputs like pet coke and furnace oil are used as fuel for generation of electricity used in the manufacture of these exempted goods. (ii) Demand of Rs. 2,77,15038/- for the period 2001-02 to 2005-06, being 10% of the value of salt under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 was raised on the ground that common inputs like HDPE bags and other inputs are used at soda ash plant and some portion of soda ash is cleared to salt plant for manufacture of salt, which is an exempted goods. (iii) Denial of CENVAT credit of Rs. 15,85,909/- availed on HDPE bags u....
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....efore Hon'ble High court of Gujarat vide the appeal Nos. 1956 of 2008 and 1248 of 2009 respectively. It is still pending. 2.4 The appeal no. E/11023/2017 relates to Show Cause Notice for the period 01.01.2008 to 30.09.2008 in the said Show Cause Notice, it was alleged that the appellant had availed cenvat credit on the pet coke/ fuel and other inputs used for generation of electricity / steam and also on HDPE Bags/ Jumbo Bags used as packing material for Soda Ash which was captively consumed in manufacture of exempted finished product namely salt. Thus, it was alleged that they had used common cenvatable inputs for manufacture of goods cleared on payment of central excise duty and also in manufacture of goods chargeable to nil rate of duty, namely, Vacuum Salt, Iodize Vacuum Salt and Pure Salt. It was alleged that salt falling under heading 2501, attracts nil rate of Central Excise duty and therefore, in terms of Rule 6(1) of Cenvat Credit Rules provides for cenvat credit shall not be allowed on such quantity of inputs used in manufacture non dutiable/ exempted goods. 2.5 Rule 6(2) of Cenvat Credit Rules requires that the manufacture engaged in manufacturing of dutiable and e....
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....da Ash manufactured and captively consumed for the purpose of purification of brine is packed in the HDPE bags/ jumbo bags on which cenvat credit was availed by them. 2.6 He pointed out that Show Cause Notice dated 09.03.2006 issued by the Additional Commissioner for the period 01.10.2001 to 15.05.2005 proposing denial of cenvat credit in respect of fuel oil and other inputs used for generation of electricity on the ground that part of the electricity is used for manufacture of exempted goods namely, Salt was set aside by Commissioner (Appeals) vide order in appeal dated 03.05.2007. Another Show Cause Notice dated 19.05.2006, the said Show Cause Notice was also decided by Commissioner confirming the demand. The appeal against the said orders was decided by Tribunal in its decision reported at 2008 (232) ELT 737 and in the said decision it was held that when the amount of 10% is paid on steam/ electricity, requirement of Rule 6(3B) is fulfilled. In the said decision following observation was made: "9. In view of the discussions above, the conclusions on the appeal before us are as under :- (a) The duty payment on steam made by the appellants is considered to be ....
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....at credit attributable to input and input services and in manufacture of exempted goods cleared by them subject to conditions and procedure prescribed under sub Rule 3(A) of Rule 6. In the order it was held that "As per the said provisions, they were required to determine for provisional reversal, an amount equal to the Cenvat Credit attributable to the inputs and input services used in or in relation to manufacture of exempted finished goods, by following the procedure prescribed in Rule 6(3A)(b) and reverse the same every month and inform the jurisdictional Range Superintendent alongwith the details thereof. Subsequently, they were required to determine amount for final reversal by following the procedure prescribed under Rule 6(3A)(c) of the Rules, at the end of the financial year and adjust the provisional reversed amount by the 30th June of subsequent F.Y. i.e. by 30.06.2009, as provided under Rule 6(3A)(g) ibid read with provisions of Rule 6(3A)(d) and (h) of the Rules." 2.10 Learned Counsel argued that the appellant have reversed the amount required to be reversed under Rule 6. It was argued that the demand has been confirmed solely on the ground that the a....
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....T 732. He argued that the Tribunal clearly held that the duty payment of steam by the appellant is considered to be adequate in terms of Rule 6. He however pointed out that both the Revenue and as well as appellant are in appeal against the said order before the Hon'ble High Court of Gujarat and appeal has been admitted. 4. Learned AR relies on the impugned order. 5. We have considered the rival submission. We find that the appellants manufacture the Soda Ash which is a dutiable product and salt of various kinds which is an exempted product. The appellants are using certain common inputs in their electricity generation process on which they are availing Cenvat Credit. The appellant have used these common inputs for generation of steam which in turn is used partly for generation of electricity and partly in the process of manufacture of Soda Ash/salt plant in terms of Rule 6 of Cenvat Credit Rules, 2004. Since, the appellant were availing Cenvat Credit of common inputs which were used for both dutiable and exempted final product. The appellants were required to follow the prescription of Rule 6 of the Cenvat Credit Rules. During the period involved in Appeal No. E/11023/2017 i....
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.... CCR. 5.5 The appeal No. E/12446/2019 and E/10669/2020 relate to common issue. The issue involve is whether the appellants are required to pay 8%/10% on value of only steam only or on the value of exempted salt as well. The exact same issue was earlier decided by Tribunal vide Order reported in 2008 (232) ELT 737 in para 9, the Tribunal has observed as follows: 6. After hearing both the sides and considering the arguments advanced, we find that the offer made by the ld. Advocate that they have already reversed the amount payable if steam or electricity is taken as exempted product in respect of the final products viz. Iodized salt/vacuum salt has to be accepted. Even though the amount payable on electricity is higher than what is payable on steam, we feel that it would be appropriate if the amount is calculated on the cost of steam and not electricity since electricity comes after the steam but before the final product viz. Iodized salt vacuum salt. Further once the amount is paid on steam, the requirement of Rule 6(3)(b) is fulfilled and therefore we do not find any need to consider the arguments advanced in support of their claim that reversal of credit would amount t....
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.... the respondent verified, and setting aside the demand of HDPE Bags used for packing of soda ash captively consumed without considering the Commissioner's findings that this payment had been made without authority and without proper calculation with sole intention to escape the future consequence of provision of rule (6) of the Central Excise Rules?" And in the appeal filed by the appellant the Hon'ble High Court has observed as follows: "Whether on the facts and in the circumstances of the case, Rule 6(3)(b) of the cenvat credit rules 2004 would be applicable?" 7. Since the fundamental issue involve in this dispute is pending before the Hon'ble High Court, we set aside the impugned order and remand the matter back to original adjudicating authority to decide afresh after the issue, regarding the amount to be reversed by the appellant in these circumstances, is decided by the Hon'ble High Court. 8. The appeals are allowed by way of remand to Adjudicating Authority in above terms (Pronounced in the open court on 16.11.2021) ============= Document 1 not 18. Regarding demand for the period from 01-04-2008 to 30-09-2008, issued vide impugned SCN, I find ....
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....es-A and B above, it is clear that they have simply calculated the proportionate amount of CENVAT credit on F.O. and Pet Coke used for generation of electricity and steam which were used in MUW plant. However, there is no such procedure prescribed in Rule 6(3A)(b) of the CENVAT Credit Rules, 2004, for determination of amount for provisional reversal every month. The reversal of proportionate amount of CENVAT credit was allowed upto 31-03-2008 as discussed in para supra and they have continued with the same procedure even after amendment in Rule 6 w.e.f. 01- 04-2008. In view of the option filed by them under Rule 6(3)(ii) ibid, they were required to determine provisionally the amount of CENVAT credit attributable to inputs and input services used in or in relation to manufacture of exempted goods viz. Salt for each month, by following the procedure prescribed under sub-clause (i) and (iii) of clause (b) under Rule 6(3A). However, they have failed to follow the procedure prescribed under Rule 6(3A), and therefore they were liable to pay an amount equal to 10% of the value of the exempted goods i.e. Salt cleared by them, in terms of the fir....