2019 (3) TMI 100 - AT - Central Excise

CENVAT Credit - common inputs used in dutiable as well as exempt goods - iron ores - reversal of 6% of iron ores in terms of Rule 6(3A) of CCR 2004 - whether the iron ore fines are to be treated as excisable goods manufactured by the appellant which are exempted by virtue of exemption notification and correspondingly whether an amount needs to be reversed under Rule 6(3) of CCR 2004? - Held that - W.E.F. 01.03.2015, the reversal under Rule 6(1) of CCR is necessary even in respect of non excisable goods which are cleared for consideration from the factory - post 01.03.2015, even for iron ore fines, reversal of CENVAT Credit is necessary. As the matter is a decided matter on merits, there is no need to go into the question of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether iron ore fines are to be treated as excisable goods manufactured by the appellant?
- Whether an amount needs to be reversed under Rule 6(3) of CCR 2004 for iron ore fines?

Analysis:
1. The appellant, engaged in pig iron manufacturing, availed CENVAT Credit under CCR 2004. The issue revolved around iron ore fines exempted under a notification. The lower authority confirmed a demand on the iron ore fines cleared by the appellant, imposing interest and penalty. The first appellate authority upheld the decision, leading to this appeal.

2. The appellant's counsel argued that iron ore fines emerged as a by-product during sponge iron manufacture and were not intentionally produced. Citing precedents, she contended that no CENVAT credit reversal was required for such fines. She also challenged the limitation basis for the demand, asserting no suppression of facts.

3. The Departmental Representative reiterated the lower authorities' stance and highlighted a notification inserting an explanation to Rule 6(1) of CCR 2004. He argued that the iron ore fines were integral to the manufacturing process and should be considered excisable goods.

4. The tribunal analyzed both arguments and past decisions. It noted that the iron ore fines emerged during the pig iron manufacturing process. Referring to previous cases, the tribunal agreed that no CENVAT credit reversal was necessary for such fines. It disagreed with the retrospective application of the notification, stating reversal was required post 01.03.2015.

5. Ultimately, the tribunal set aside the impugned order, allowing the appeal. The judgment clarified the treatment of iron ore fines as non-excisable goods and the requirement for CENVAT credit reversal post 01.03.2015.