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2017 (8) TMI 397 - AT - Central ExciseCENVAT credit - common inputs used in dutiable as well as exempt goods - N/N. 115/75-CE dated 30.04.1975 - Held that - no common inputs were used for generation of the byproduct /waste. Thus, the embargo created in Rule 6 ibid for reversal of amount equal to 8% / 10% of sale price of the said goods will not be applicable in the facts and circumstances of the case. With regard to Acid Oil, this Tribunal in the case of Morvi Vegetable Products Ltd. 2011 (10) TMI 254 - CESTAT, AHMEDABAD has held that Acid Oil is not covered by the provisions of Rule 6 ibid, and thus, there is no need to reverse 8% / 10% of the value of such Acid Oil - with regard to D.O. Desilete, the amount in question has already been reversed from the Cenvat Account and appropriate interest amount has also been paid by the appellant, I am of the opinion that the restrictions contained in Rule 6 ibid for payment of amount on the exempted goods will not be applicable in this case. Non-filing of application within the stipulated time limit of 6 months is a procedural lapse and the same cannot be strictly applied to deny the benefit available under the statute. Appeal allowed - decided in favor of appellant.
Issues:
1. Interpretation of Rule 6 of the Cenvat Credit Rules, 2004 regarding reversal of amount equal to sale price of exempted goods. 2. Applicability of Rule 6 to by-products like Acid Oil, Soya Lecithin, and Oil Sludge. 3. Settlement of dispute for the period March 2003 to March 2004. 4. Time-barred application under Section 73 of the Finance Act, 2010 for the period April 2004 to February 2005. Analysis: Issue 1: The case involved the interpretation of Rule 6 of the Cenvat Credit Rules, 2004 concerning the reversal of an amount equal to the sale price of exempted goods. The appellant used cenvatable inputs in the manufacturing process, leading to the generation of by-products exempted from duty. The Department demanded payment equal to 8%/10% of the sale price of these products. The Tribunal found that no common inputs were used for generating the by-products, thus ruling that the embargo in Rule 6 did not apply in this case. Issue 2: The Tribunal considered the applicability of Rule 6 to specific by-products like Acid Oil, Soya Lecithin, and Oil Sludge. It was observed that Acid Oil was not covered by Rule 6, as per a previous Tribunal decision. The Tribunal also noted that the appellant had already reversed the Cenvat Credit amount for the by-product D.O. Desilete, which was not disputed by the Department. Therefore, the restrictions in Rule 6 did not apply to these circumstances. Issue 3: Regarding the dispute for the period March 2003 to March 2004, the Tribunal found that the appellant had already reversed the Cenvat Credit amount along with interest, and the Commissioner had accepted this settlement. As a result, the confirmed demand for this period was deemed unsustainable and was set aside. Issue 4: For the period April 2004 to February 2005, the Tribunal addressed the rejection of the appellant's application under Section 73 of the Finance Act, 2010 as time-barred. The Tribunal held that the appellant had complied with the substantial requirement of paying the Cenvat Credit amount with interest, despite a procedural lapse in filing the application within the stipulated time limit. Citing precedent, the Tribunal concluded that the benefit under the statute should not be denied due to a procedural error. Consequently, the demand for this period was also set aside. In conclusion, the Tribunal found no merit in the impugned orders and allowed the appeals in favor of the appellants, setting aside the demands for both periods under consideration.
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