TaxTMI 
TaxTMI 
2023 (7) TMI 1172
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....d by the Commissioner (Appeals) dated 29.03.2022. This order of Commissioner (Appeals) has been appealed against in Appeal No. E/30214/2022. 2. For the subsequent period November 2015 to June 2017, the Show Cause Notice was issued vide Show Cause Notice No. C.No.V/72/15/07/2018-ADjn dated 03.04.2018 and confirmed vide Order-in- Original dated 29.11.2018. However, on appeal the matter was remanded to the Original Authority by the Commissioner (Appeals), who again passed Denovo Order-in-Original dated 17.03.2020 and against the said Order-in- Original appellant went in appeal before Commissioner (Appeals), and thereafter the order dated 28.10.2020 has been passed by the Commissioner (Appeals). Against this order of Commissioner (Appeals), the appellants have filed Appeal No. E/30334/2021. 3. They have also filed an Appeal No. E/30237/2020 in respect of Orderin- Appeal dated 23.10.2019. 4. The facts, in brief, are that the appellants are engaged in the manufacture of sponge iron and are using iron ore lumps as input in the process of manufacturing sponge iron. In the process of crushing/screening/grading of iron ore lumps, there is an emergence of "iron ore fines" which they ....
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....t Rules, 2004 "Explanation 1 - 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." The effect of the above stated explanation is that the term 'exempted goods' shall also include 'non-excisable goods'. Therefore, an assessee clearing non-excisable goods is also required to pay an amount equal to @ 6% on the value of such non-excisable goods, if the assessee does not maintain separate accounts of inputs/input services used for production of such non-excisable goods, as the said term is defined as to include in the term 'exempted goods' defined under Rule 2(h) of the said Credit Rules. In the instant case, there is no dispute on the fact that the appellant has not maintained separate accounts of the goods/services used in the production of the impugned goods. Therefore, even if the goods are held to be non-excisable, as contended by the appellant, the appellant is liable to pay the amount at the rate prescribed under Rule 6 of the Cenvat Credit Rules, 2004, on the impugned goods at the time of their clearance. There is no contentio....
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....nd hence proceeded to comply with the observations and directions in the remand order. 9. The main issue common to all the three appeals is that whether the appellants were liable to pay an amount in terms of Rule 6 in respect of "iron ore fines" being cleared by them on receipt of consideration or otherwise. Some of the admitted facts are that they were engaged in the manufacture of sponge iron for which they are procuring iron ore lumps. They are also incurring certain expenses on transportation etc in respect of these inputs and were taking credit of service tax paid. Further, as they were not able to use iron ore of certain diameters, they carried out screening/sieving of the iron ore lumps in order to segregate iron ore above 10mm and below 10mm. The iron ore below 10mm, which cannot be used by them in their process of manufacturing sponge iron, was being cleared as "iron ore fines" on receipt of consideration. The iron ores above 10mm were being used in the process of manufacturing sponge iron. It is also admitted fact that they have not maintained separate account for so called exempted goods and dutiable goods. 10. Learned DR has forcefully argued that post amendment ....
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....y relied on Hon'ble Supreme Court's judgment in the case of UOI Vs DSCL Sugar Ltd., [2015 (322) ELT 769 (SC)]. They have also relied on the case of Balarampur Chini Mills Ltd., Vs UOI [2019 (368) ELT 276 (ALL)], which also relied on this judgment . 13. Further, it is apparent from the order of the Commissioner (Appeals) dated 23.10.2019, vide which the matter was remanded back to the Original Authority for Denovo proceedings, the observations and decision of the Commissioner (Appeals) was finally accepted by the Department and followed by Original Authority. Therefore, the order of the Commissioner (Appeals) holding that in the given facts of the case, the iron ore fines emerging in the case of screening of iron ore lumps, even if treated as a "non-excisable goods", was still covered under Rule 6 post 01.03.2015. Therefore, there is no reason to decide whether in the given facts of the case, any manufacturing process was involved or not. However, appellants have cited many case laws in support of their contention that the process involved is not amounting to manufacture. Following case laws have been cited: i) CCE & ST, Raipur Vs Aarti Sponge and Power Ltd., [2016....
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....ng of Iron Ore has been held to be process of manufacture.'' 17. In Tata Metaliks Ltd., in Para 10, relying on earlier judgments of Tribunal in the case of Vikram Ispat Ltd., Aparant Iron & Steel Pvt Ltd., and Narmada Gelatines Ltd., the matter was remanded with a direction that the decision of Tribunal in the case of Narmada Gelatines Ltd., which followed the decision of Bombay High Court, should be followed. In this case, Hon'ble High Court had held that when by-product or waste arising during the course of manufacture were cleared without payment of duty, erstwhile Central Excise Rules, Rule 63B of CCR 2004 were not attracted. 18. In Maa Mangla Ispat Pvt Ltd., in para 5, the Tribunal considered whether the provisions of Rule 6(2) and 6(3) of CCR were applicable when a manufacture manufactures two products, one excisable and other fully exempted using common input and/ or input service and came to the conclusion that the iron ore fines had emerged as an unavoidable and inevitable waste. 19. In the Godavari Power and Ispat Ltd., the appellant were engaged in manufacture of Sponge Iron, MS Ingots, Billets and H.B.Wires and were also generating electricity. Department's cas....
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....cludes salt; Explanation - for the purposes of this clause, "goods" includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable." 7. As per the aforesaid explanation, "goods" would now include any article, material or substance capable of being bought or sold for consideration and as such goods shall be deemed to be marketable. Thus, it introduce the deeming fiction by which certain kind of goods are treated as marketable and thus excisable. 8. However, before the aforesaid fiction is to be applied, it is necessary that the process should fall within the definition of "manufacture" as contained in Section 2(f) of the Act. The relevant portion of amended Section 2(f) reads as under : Section 2(f) - "manufacture" includes any process - (i) incidental or ancillary to be completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of [The First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to [manufacture; or] (iii) which in relation to the goods ....
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....he factory. It also considered that by way of Circular dated 25.04.2016 the CBIC interpreted the said amendment and held that Bagasse was an exempted products in terms of explanation1. The relevant paras of Hon'ble High Court in this case is quoted, as under: "28. A perusal of the Explanation 1 to Rule 6 would indicate that it provides that the exempted goods and final product as defined in Clauses (d) & (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. 29. Explanation 1, talks about the inclusion of non-excisable goods cleared for consideration from the factory within the category of exempted goods or final products while the Circular dated 25-4-2016 proceeds on the basis that Bagasse is a non-excisable goods and is now to be treated like exempted goods for the purpose of a reversal of input and Input service. 30. As noted by the Hon'ble Supreme Court in the case of Union of India and Others v. M/s. DSCL Sugar Ltd. and Others (supra) specifically in the contest of Bagasse, Rule 6 applies only when there is a manufacture of final products or of exempted products, and if there is no manufacture, Rule 6 of the Cen....
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....ufactured final goods. Therefore, relying on case laws cited, supra, it would clearly not be covered by Rule 6 for period before 01.04.2015. Even for the period after 01.04.2015 were such "non-excisable goods" which are to be treated as "exempted goods", would still not be covered under Rule 6 for the purpose of reversal of credit or payment of an amount equivalent by relying on the ratio in the case of DSCL Sugar Ltd., and Balarampur Chini Mills Ltd. Essentially, unless the good is a manufactured goods, Rule 6 of CCR cannot be made applicable. Even when it is not manufactured and it is refunded to as non-excisable goods, which are required to be treated as the exempted goods, after 01.03.2015, it will not be covered in as much as the "exempted goods" themselves are also required to be manufactured goods first. Therefore Rule 6 would not be applicable in the given facts of the case. 26. Therefore in the facts of the case, it is clear that there is no manufacturing process involved and therefore the iron ore fines being cleared for a consideration, is not a manufactured goods. Further, respectfully following the ratio of Hon'ble Supreme Court and High Court, quoted supra, unless ....