9911796707
TMI Blog2011 (3) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 passed by the Commissioner (Appeals), Indore. By the impugned order, the Commissioner (Appeals) has allowed the appeal filed by the respondents against the order of the adjudicating authority dated 13.1.1999. By the said order, the Assistant Commissioner had confirmed the demand of Rs.6,83,033/- and in case failure to pay the same within three months with interest thereon along with penalty of Rs.70,000/-. The respondents were issued a show cause notice dated 15.7.98 on the ground that they had contravened the provisions of Rule 57CC of the Central Excise Rules, 1944 inasmuch as they had not maintained the separate inventory and the receipt and use of common input namely sodium hydroxide used in the manufacture of dutiable as well as exempted products. The respondents contested the proceedings by filing reply dated 11/14-12-1998. 2. The DR placing reliance in the decision in the matter of Hind Lamps Ltd. vs. C.C.E., Kanpur reported in 2010 (250) ELT 237 (Tri.-Del.) and Maruti Suzuki Ltd. vs. C.C.E., Delhi III reported in 2009 (240) ELT 641 (SC) as well as C.C.E. vs. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) ELT 661 (SC) submitted that the Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual quantity was sold to others. The Tribunal taking into consideration the provisions of law comprised under Rule 57A, 57B(i)(iv) and 57CC(1) observed thus 2.1?In terms of Rule 57B(1)(iv), notwithstanding anything contained in the Rule 57A, the manufacturer of final product shall be allowed to take credit of specified duty paid on the goods used for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production. The basis in the impugned order to invoke the provisions of Rule 57CC(1) is that the appellants had taken Modvat credit on certain quantity of inputs which were used in the generation of steam, which was cleared outside the factory without payment of duty. It is submitted that Rule 57CC(1) would be applicable only if Rule 57C can be made applicable and that the provisions of Rule 57C are not applicable to the present case, since Modvat credit as taken is specifically allowed in respect of goods used for generation of electricity or steam used in the manufacture of final product or for any other purpose of production under Rule 57B(1)(iv). In this view if the goods are used for generation of either elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal product. However, to the extent the excess electricity is cleared to the grid for distribution or to the joint ventures, vendors, and that too for a price (sale) the process and the use test fails. In such a case, the nexus between the process and the use gets disconnected. In such a case, it cannot be said that electricity generated is used in or in relation to the manufacture of final product, within the factory . Therefore, to the extent of the clearance of excess electricity outside the factory to the joint ventures, vendors, grid etc. would not be admissible for CENVAT credit as such wheeled out electricity, cleared for a price, would not fall within the definition of input in Rule 2(g) of the CENVAT Credit Rules, 2002. This view is also expressed in para 9 of the judgment of this Court in the case of Collector of Central Excise v. Solaris Chemtech Limited - 2007 (214) E.L.T. 481 (S.C.). Further, our view is supported by the observations of this Court in the case of Vikram Cement v. Commnr. of Central Excise, Indore - 2006 (194) E.L.T. 3 (S.C.) which is quoted below :- It appears to us on a plain reading of the clause that the phrase within the factory of production means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect has not been properly appreciated by the Gujarat High Court in the above case of M/s. Gujarat Narmada Valley reported in 2006 (193) E.L.T. 136 (supra). 9. In Hind Lamps Ltd. case, the Tribunal after taking into consideration of the provisions of Rule 57CC including sub-rule (9) held thus 9.?The Rule clearly mandates the manufacturer to maintain separate accounts in relation to the inputs utilised in duty payable final products and those in nil-duty payable final products and those which are exempted from duty liability and refrain from availing credit in respect of the inputs utilised in duty free final products. The word shall , used in the said Rule with reference to the requirement of maintenance of separate account as well as with reference to obligation not to take credit of the specified duty paid on the inputs utilised in duty free final products, discloses the purpose and the mandatory nature of the said rule 10. It was also held by the Tribunal in Hind Lamps Ltd. case as under:- 18.?The opening sentence of Rule 57CC(1) clearly states that where a manufacturer is engaged in manufacture of any final product which is chargeable to duty as well as in any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
