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TMI Blog2012 (4) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of dutiable and exempted final products had been maintained, the provisions of Rule 57CC of the Central Excise Rules, 1944 would become applicable and hence, the appellant in respect of clearances of exempted goods i.e. Vanaspati/Refined Vegetable oil would be liable to pay an amount equal to 8% of their sale value. It is on this basis that a show cause notice dated 27-8-2002 was issued to the appellant for demand of an amount of ₹ 12,25,95,962/- in respect of clearance of vanaspati ghee and refined vegetable oil during the period 10-2-1998 to 13-3-2009 along with interest and also for imposition of penalty on them. The show cause notice was adjudicated by the Commissioner vide order-in-original No. 89/LDH/03, dated 16-4-2003 by which the Commissioner ordered recovery of an amount of ₹ 4,51,574/-, which represented the Cenvat credit on the proportionate quantity of common inputs which went into the manufacture of exempted goods and dropped the remaining demand under Rule 57CC. The Commissioner also ordered recovery of interest on the amount of ₹ 4,51,574/- and imposed equal amount of penalty on them. 1.2 The department filed an appeal No. E/2814/2004 aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.). 1.4 In de novo adjudication proceedings in pursuance of the order dated 19-3-2010 of the Hon ble Punjab Haryana High Court, the Commissioner vide order-in-original dated 23-6-2011 confirmed the demand of ₹ 12,25,95,962/- against the appellant under Rule 57-I of Central Excise Rules along with interest and besides this, imposed penalty of equal amount on the appellant under the same rule read with Section 11AC of the Central Excise Act, 1944. The demand was confirmed by invoking extended period under proviso to Section 11A(1) of the Central Excise Act, 1944. 1.5 Against this order of the Commissioner, this appeal along with stay application have been filed. 2. Heard both the sides in respect of stay application. 3. Shri A.R. Madhav Rao, Advocate, ld. Counsel for the appellant, pleaded that actual amount of Cenvat credit in respect of phosphoric acid and caustic soda lye attributable to the refined vegetable oil/vanaspati ghee is ₹ 4,51,574/-, which has already been reversed, that acid oil/soap stocks was inevitable by-products and hence, the provisions of Rule 57CC would not be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is not a case for waiver. 5. We have carefully considered the submissions from both the sides and perused the records. There is no dispute about the fact that the intended products of the appellant are vanaspati ghee and refined vegetable oil, which are manufactured from crude vegetable oil and in this process, acid oil/soap stock emerges as inevitable by-product. While vanaspati and refined oil are fully exempt from duty, soap stock and acid oil are chargeable to duty. 6. Prima facie, we find that even if the appellant want to maintain separate account and inventory of the inputs meant for dutiable final products and exempted final product, they cannot do so. Lex Non Cogit ad impossibilia - law does not compel a person to do that which is impossible, is a well settled legal principle applicable even in taxation matters. Hon ble Allahabad High Court in case of Commissioner of Income Tax v. Premkumar reported in 2008 (214) CTR 452 (All.) while dealing with the question whether an assessee can be faulted for not declaring the amount of capital gains on acquisition of land when the amount of compensation itself is not determined, held as follows :- Lex Non Cogit ad im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd either main product or by-product/waste is fully exempt from duty, would mean that the law provides for compulsory recovery of an amount equal to 8% or 10% of sale price of exempted product, which may be highly disproportionate to the actual amount of Cenvat credit attributable to exempted product, sometimes more than 100 times the actual proportionate Cenvat credit attributable to exempted final product. An interpretation which leads to such absurdity has to be avoided. 7. In view of the above, we are of prima facie view that since in this case, it is impossible for appellant to maintain separate account and inventory of the Cenvat credit availed inputs used for manufacture of exempted final product - vegetable ghee and refined vegetable oil and dutiable final product and soap stock/acid oil, the provisions of Rule 57CC cannot be invoked. Ratio of the Apex Court s judgment in case of C.C.E., Vadodara-II v. Gujarat Narmada Fertilizer Co. reported in 2009 (240) E.L.T. 661 (S.C.) is that when common Cenvat credit availed input - LSHS was used as fuel for manufacture of dutiable final products and exempted final product (fertilizer) and when inputs used as fuel were excluded fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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