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2024 (10) TMI 893

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....taken up together for discussion and decision. For the sake of convenience, we may take the facts of the Appeal No. E/60370/2020 in the case of M/s Ram Agro Chemicals Pvt Ltd. 2.1 Briefly stated facts of the present case are that the appellant is engaged in the manufacture of Zinc Ingots and Zinc Sulphate fertilizer falling under Chapter Heading No. 7901 and 2833 of the Central Excise Tariff Act, 1985. The officials of DGGI on the basis of intelligence initiated an investigation against the appellant and other Zinc Sulphate manufacturers alleging non-compliance of Rule 6 of the Cenvat Credit Rules, 2004. Shri Amit Jain, director of the appellant appeared before SIO and his statement dated 28.11.2017 was recorded wherein he inter alia deposed that their firm manufactures Zinc Ash and Zinc Skimming fertilizers; they pulverize Zinc Skimming which results into Zinc Metal and Zinc Ash; the metal portion is melted in furnace and converted into Zinc Ingots; Sulfuric Acid is added in Zinc Ash powder which results into Zinc Sulphate; Zinc Ash powder is captively consumed as well as sold on payment of Central Excise Duty; the captively consumed Zinc Ash is cleared on payment of Central Exci....

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....duty on Zinc Ash was paid from Cenvat account so as to encash their Cenvat by passing on the incidence to their final buyer and also justify/avoid the reversal of Cenvat Credit. 2.4 Further, as per Circular dated 25.04.2016, Zinc Ash and Skimming are non-excisable goods and need to be treated as exempted goods for the purpose of reversal of credit of input or input services in terms of Rule 6 of the Cenvat Credit Rules, 2004. The appellant did not avail option under Rules 6(2) and 6(3) of the Cenvat Credit Rules, 2004 and did not maintain separate register for quantity of Zinc Ash used in the manufacture of their dutiable products and their exempted products. As per data submitted by the appellant, they have sold/captively consumed Zinc Ash upto June 2017. The appellant during March 2015 to June 2017 sold/consumed 1928.6 MTs Zinc Ash. The value of sold/captively consumed Zinc Ash comes to Rs.8,26,35,841/- on which the appellant was required to reverse credit amounting to Rs.44,88,629/ in terms of Rule 6(3) of the Cenvat Credit Rules, 2004. The appellant during aforesaid period charged and collected Central Excise Duty on exempted by product i.e. Zinc Ash. As per Section 11D of the....

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.... Industries (cited supra), which are reproduced herein below: "6. After considering the submissions made by both the parties and perusal of the material on record, we find that the entire proceedings in this case was initiated on the investigation conducted by the DGGI and the same was based on the judgment of Hon'ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd (supra) and subsequent Board Circular No. 1027/15/2016-CX dated 25.04.2016, wherein it has been clarified that the products including bagasse, dross and skimming are non-excisable goods. Further, as per the explanations 1 & 2 inserted w.e.f. 01.03.2015, exempted goods shall include non-excisable goods cleared for consideration from the factory. As per the Circular dated 25.04.2016, it was provided that Zinc Ash and Skimming are non-excisable goods and need to be treated as exempted goods for the purpose of reversal of the credit of inputs or input services in terms of the Rule 6 of the CCR, 2004. As per the department, the appellant did not avail the option under Rule 6(2) and under Rule 6(3) and further did not maintain separate register for quantity of Zinc Ash used in the manufacture of their dutiable....

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....nt of the Hon'ble Supreme Court in the case of Union of India Vs. M/s. DSCL Sugar Ltd [2015 (322) E.L.T. 769 (S.C.)] holding that Bagasse is only an agricultural waste and residue and it is not a result of any process which can be termed as 'manufacture'. Similar conclusion was also drawn by the Hon'ble High Court of Bombay in the case of M/s Hindalco Industries Ltd. Vs. Union of India [(2015 (315) E.L.T.10 (Bom.)] in relation to dross and skimming of aluminium, zinc or other non-ferrous metals. 4. The issue again came before the Hon'ble Supreme court in the case of Union of India Vs. M/s. Indian Sucrose Limited [SLP(C) No. 1700/2021], wherein the Hon'ble Supreme Court vide its judgment dated 04.03.2022, referred to its observations in the Union of India vs. M/s. DSCL Sugar Ltd & Ors. (supra) holding that Bagasse is non-excisable to which the CENVAT Credit Rules have no application, and held that the Circular dated 25.04.2016 is unsustainable in law. 5. In light of the above judgment, Circular No. 1027/15/2016-CX dated 25.04.2016 has become non-est and is hereby rescinded. Cases kept in Call Book on the above issue, if any, may be taken out and adjudicated in ....

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....y fraud, collusion or willful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder. These ingredients postulate a positive act, therefore, failure to pay duty or take out a licence is not necessary due to fraud or collusion or willful mis- statement or suppression of facts or contravention of any provisions of the Act. b) The Hon'ble Supreme Court has in the case of Collector of Central Excise v/s Chemphar Drugs& Liniments cited as 1989 (40) E.L.T. 276 (S.C.) held that extended period of five years is applicable only when something positive other than mere inaction or failure on the part of manufacturer is proved. It further held that conscious or deliberate withholding of information by manufacturer is necessary for invoking extended period. If the Respondent had full knowledge or manufacturer had reasonable belief that he is not required to give particular information, only normal period of limitation is applicable. c) The Hon'ble Supreme Court has in the case of Gopal Zarda Udyog v/s Commissioner of Central Excise, New Delhi cited as 2005 (188) E.L.T. 251 (S.C.) held that mere failure or negligence on part of m....