2011 (4) TMI 445 - AT - Central Excise

Cenvat Credit - Bi product / wastage - Provisions of Rule 6(3) is applicable or not - Removal of by products/subsidiary products when such products are exempted from whole of duty - Whether clearances at Nil rate of duty are to be considered as clearances of exempted goods for the purpose of attracting provisions of Rule 6(3) of Cenvat Credit Rules, 2004 requiring payment of 10% of the value of the exempted goods - Held that - as per the decision of Hon ble Mumbai High Court in the case of M/s Rallis India Ltd. vs. UoI 2008 -TMI - 32215 - HIGH COURT BOMBAY , provisions of Rule 6(3) are not applicable - Hence, decided in favour of assessee.

Summary

Issues:
Interpretation of provisions of Rule 6(3) of Cenvat Credit Rules, 2004 regarding clearances at Nil rate of duty and exempted goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved a dispute regarding the treatment of clearances at Nil rate of duty in relation to the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004. The respondents, engaged in the manufacture of detergent washing powder, were clearing a by-product, Spent Sulphuric Acid, at Nil rate of duty for use in the manufacture of fertilizers under Notification No. 4/2006. The issue at hand was whether these clearances at Nil rate of duty should be considered as clearances of exempted goods, thereby attracting the provisions of Rule 6(3) which requires payment of 10% of the value of exempted goods.

The Commissioner (Appeals) had ruled in favor of the respondents, a decision that was based on previous Tribunal orders and the decision of the Hon'ble Mumbai High Court in the case of M/s Rallis India Ltd. vs. UoI. The Tribunal, in its earlier decisions, had also found in favor of the respondents for different periods, relying on the Mumbai High Court's decision that Rule 6(3) was not applicable in the case cited. The learned Consultant for the respondents highlighted these precedents to support the early hearing of the appeal and requested a decision in favor of the respondents, especially since the Revenue had not filed an appeal against the previous decisions.

After considering the submissions from both sides, the presiding judge, Mr. B.S.V. Murthy, allowed the early hearing application filed by the respondents. The appeal filed by the Revenue was rejected as lacking in merits, given the consistent decisions of the Tribunal in favor of the same respondents for different periods. The judgment emphasized the reliance on previous decisions and the Mumbai High Court's ruling to support the rejection of the Revenue's appeal.