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2020 (6) TMI 416 - AT - Central ExciseCENVAT Credit - manufacture of taxable as well as exempt goods - iron ore fines - period April 2015 to June 2016 - Rule 6 (3) of the Cenvat Credit Rules, 2004 - HELD THAT - The issue is no longer res-integra as it has already been decided in several decisions of this Tribunal that iron ore fines which emerges during the course of manufacture of sponge iron ore are in unavoidable and inevitable by-product and therefore same does not fall under the category of manufacture goods and accordingly same are not excisable. Thus, such goods cannot be considered as exempted goods and provisions of Rule 6 of the Cenvat Credit Rules, 2004 are not applicable - reliance can be placed in the case of CCE, RAIPUR (CG.) VERSUS M/S. SARDA ENERGY AND MINERALS LTD. 2013 (12) TMI 859 - CESTAT NEW DELHI . Appeal allowed - decided in favor of appellant.
Issues:
1. Interpretation of Rule 6 (3) of the Cenvat Credit Rules, 2004 regarding the reversal of Cenvat credit on exempted goods. 2. Classification of iron ore fines emerging during the manufacture of sponge iron as exempted or non-exempted goods. 3. Applicability of Rule 6 of the Cenvat Credit Rules, 2004 to the iron ore fines cleared by the appellant. 4. Adjudication of charges in a show cause notice related to the payment of central excise duty and reversal of Cenvat credit. Analysis: 1. The case involved a dispute regarding the interpretation of Rule 6 (3) of the Cenvat Credit Rules, 2004. The Department contended that the appellant, engaged in manufacturing iron and steel products, should reverse Cenvat credit on iron ore fines sold as exempted goods. The Assistant Commissioner initially ruled in favor of the appellant, stating that iron ore fines are not excisable goods. However, the Commissioner (Appeals) overturned this decision, holding that the appellant must reverse Cenvat credit on the value of iron ore fines cleared by them. 2. The key issue was whether iron ore fines emerging during the manufacture of sponge iron should be classified as exempted goods. The Tribunal referred to previous decisions, including the case of Commissioner of Central Excise versus Sarda Energy and Minerals Ltd., which established that iron ore fines are unavoidable by-products and do not qualify as excisable goods. Therefore, such goods cannot be considered exempted, and Rule 6 of the Cenvat Credit Rules, 2004 does not apply. 3. In line with precedent and legal principles, the Tribunal emphasized that the generation of iron ore fines during the manufacturing process does not involve a separate manufacturing activity. Therefore, iron ore fines cannot be deemed as exempted goods subject to duty payment. Citing the case of Nav Durga Fuels Pvt. Ltd. versus Commissioner of Central Excise, the Tribunal reiterated that iron ore fines do not fall under the category of exempted goods, and the demand for reversal of Cenvat credit was deemed improper and unjustified. 4. Ultimately, the Tribunal found that the facts of the case aligned with previous decisions, leading to the conclusion that the impugned order-in-appeal lacked merit. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant, emphasizing the non-applicability of Rule 6 of the Cenvat Credit Rules, 2004 to the iron ore fines in question.
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