2009 (7) TMI 930 - AT - Central Excise

Summary

Issues:
Interpretation of Rule 6(3)(b) of Cenvat Credit Rules regarding payment for iron ore fine considered as excisable goods produced but exempted, and imposition of penalty for not maintaining separate accounts for dutiable and exempted goods.

Analysis:
The judgment dealt with the issue of whether iron ore fine, obtained from duty-free iron ore during the manufacture of sponge iron, should be considered excisable goods produced but exempted under Rule 6(3)(b) of Cenvat Credit Rules. The authorities had required the appellant to pay 10% of the sale price of iron ore fine and imposed a penalty for not maintaining separate accounts for common inputs used for dutiable and exempted goods. The appellant argued that iron ore fine should not be treated as manufactured out of iron ore and, therefore, should not be considered excisable. The appellant also contended that Rule 6(3)(b) should not apply to the clearance of iron ore fine. The appellant had already deposited a sum of Rs. 5 lakhs as per the order under Section 35F before the Commissioner (Appeals) and argued against the imposition of penalty under Section 11AC since iron ore fine was deemed an exempted product by the Department.

The Tribunal, after considering both parties' submissions, prima facie agreed with the appellant's position that iron ore fine should not be treated as a separate product from iron ore, thus warranting a waiver of dues as per the impugned order. The Tribunal noted that the appellant had already deposited Rs. 5 lakhs in compliance with the Commissioner (Appeals)'s order. Consequently, the Tribunal decided to waive the pre-deposit of the balance amount of duty, penalty, and interest until the appeal's final disposal. The stay petition was disposed of accordingly, granting relief to the appellant regarding the payment and penalty issues related to the iron ore fine.