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TMI Blog2009 (8) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said rules, it was clarified that the credit shall not be allowed to input services used exclusively for manufacture of exempted goods or exempted services; that basing on the above facts, the appellant was issued with a SCN dated 26-8-2008 directing them to show cause as to why the cenvat credit of Rs. 17,69,572/- which includes education cess, wrongly availed should not be disallowed under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944, interest under Rule 14 of the Rules read with Section 11AB of the Act should not be recovered and penalty under Rule 15 of the Rule should not be imposed; that on adjudication, the Cenvat credit of Rs. 80,640/- wrongly availed in respect of above input service used in respect of boiler ash and compost is disallowed under Rule 14 of the Rules read with Section 11A of the Act, and the Cenvat credit of Rs. 16,88,932/- availed in respect of input service used for handling, removing etc. of press mud is allowed; that in the same order, penalty of Rs. 80,640/- was also imposed, besides directing the appellant to pay interest at appropriate rate under Rule 14 of the Rules. 2. Being aggrieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 (176) E.L.T. 734 (Tribunal) = 2004 (61) RLT 673] and (d) Chengalrayan Co-op. Sugar Mills Ltd. [2007 (218) E.L.T. 416] (vi) that as the credit is not deniable, the penalty of Rs. 80,640/- imposed under Rule 15 of the Rules is also not sustainable; (vii) that the issue involved is of interpretation and the availment of credit is not proved with mala fide intention and above all as the demand is within time limit, there is absolutely no question of imposition of equal penalty; (viii) that neither in the SCN nor in the OIO, any specific sub-clause of Rule 15 is mentioned for imposing penalty and hence the penalty imposed is not sustainable in view of the Apex Court decision in the case of Amrit Foods [2005 (190) E.L.T. 433 (S.C.)]; (ix) that the penalty on the manufacturer availing wrong credit of input services is imposable under Rule 15(3) and the maximum penalty imposable is only Rs. 2,000/-. 3. PH was held on 10-8-2009 at 06.30 PM at Kolhapur. Shri V.B. Gaikawad, Advocate duly authorized by the appellant appeared before me. None appeared from department s side despite intimation. During the hearing, the Advocate reiterated the submissions made in the appeal memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of UOI v. Ahmedabad Electricity Co. Ltd. supra, these two products cannot be considered as excisable commodities. The contention of the appellant is correct, in as much as the Apex Court in the said case has held that Mere listing of an item in Schedule to Central Excise Tariff Act, 1985 is not sufficient to make it excisable as they have to pass further test of being manufactured or produced in India, which is sine qua non for imposition of duty . The Apex Court has further held that consistent stand taken by the department that cinder was not excisable as it did not involve any manufacturing activity . In the instant case also, during the course of manufacture of sugar and molasses, the two wastes viz. boiler ash and spent wash/compost are being generated and they are neither be considered as a By- product nor end product . Further to continue manufacturing activity, those wastes have to be removed from the manufacturing yard or equipment. Otherwise, manufacturing activity of the appellant would have come to a standstill. Basing on the ratio laid down by the Apex Court in the above case, these two products in question cannot be considered as excisable goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are holding registration for manufacture of sugar and molasses. The input service i.e. manpower recruitment or supply agency service was used in relation to manufacture of their final products. The Apex Court in the case of CCE v. Solaris Chemtech Ltd. -2007 (214) E.L.T. 481 (S.C.) has held that the inputs used as fuel for generation of electricity captively consumed will qualify for Modvat credit only if they are used in or in relation to manufacture of final product such as cement..... . In the instant case also, there is no dispute that the service was used in relation to the manufacture of final product in the factory. Further the Apex Court in its latest decision in the case of Maruti Suzuki Ltd. v. CCE Delhi-III - 2009 (240) E.L.T. 641 (S.C.) held that whatever used in relation to manufacture of final product would come within the ambit of definition of input (input service in the instant case.) The Apex Court vide 13 held as under :- Electricity generation is a separate and distinct activity. It is an independent activity. It has its own economics. It does not form part of the process in which inputs are transformed into separate identifiable commodity, tho ..... 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