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TMI Blog2015 (10) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 Central Excise dated 1/3/2008, the Menthol Crystal (BP/USP grade) covered under Chapter heading 30039021 were fully exempted from duty. Therefore, these Menthol Crystals manufactured by appellants became exempted goods w.e.f. 1/3/2008. The manufacturing process of final product indicates that the Menthol Crystal is the main final product manufactured out of the raw material. Therefore, the case of Revenue is that the CENVAT Credit in balance as on 1/3/2008 is required to be reversed by the appellant as per provisions of Rule 11 of CENVAT Credit Rules, 2004. In these set of facts, the show cause notice was issued to the appellant that as per the notification no. 4/08 dated 1/3/2008, their final product has become exempt. Therefore, CENVAT Credit lying in their CENVAT Credit account should lapse and should not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export. Therefore, the appellant cannot avail benefit of CENVAT Credit either for primary final product mainly Menthol Crystals (BP/USP grade) or for any other bye-product peppermint oil merging during manufacturing process of Menthol Crystal (BP/USP grade) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Credit has been settled by this Tribunal in appellant's own case wherein this Tribunal has observed as under: We find that the adjudicating authority in para 18, had categorically come to the conclusion that the some of the products like peppermint oil, etc. were excisable and dutiable. The only question that has been incorrectly construed by adjudicating authority is that according to him, the Menthol Crystals (BP/USP Grade) is the main product and other products were not produced independently, through a separate process of manufacture and were only unintended by products obtained from residual material left after the manufacture of exempted goods. In our considered view, this is an incorrect proposition in law. We find that the provisions of Rule 6 (2) specifically says that whenever a manufacturer of goods who manufactures the final product which are chargeable to duty as well as exempted, should maintain separate accounts for receipt, consumption, and inventory of input. In provisions of Rule 6 (3), it is clearly indicated that if manufacturer is not able to maintain such account, he can clear the exempted goods by paying amount equivalent to 8% or 10% of the value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6 (3) (b) of the CENVAT Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question, whether 8% has to be paid on the sale price of exempted goods. Under Rule 6 (3) (v) of CENVAT Credit Rules, 2004 to 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under: "Further, it is now clearly and specifically mentioned in Rule 57 AD (4) that the provisions relating to non-availability of Modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export under bond in terms of the provisions of Rule 13. In the new Rule 57 AD, it has been explicitly p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as under: The CENVAT Credit is allowed n (sic) the duty paid on inputs to mitigate the effect of double taxation of levying duty on inputs as also on the final product. If, however, the exempted final product is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a final product like tractor is otherwise exempted from excise duty even for domestic consumption and such tractors are exported. The various inputs like engines, etc. used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6) (v) has been consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ENVAT Credit Rules, 2002 there was provisions for removal of exempted goods under bond but he same was not available with effect from 9th September, 2004 under CENVAT Credit Rules, 2004. We may reproduce Rule 6(5) of the CENVAT Credit Rules, 2002 which reads as follows: "(5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3), and sub-rule (4) shall not be applicable in case the exempted goods are either:- (i) Cleared to a unit in a free trade zone; or (ii) Cleared to a unit in a special economic zone: or (iii) Cleared to a hundred per cent export oriented undertaking; or (iv) Cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (v) Supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India, in the Ministry of Finance (Department of Revenue) No, 108/95-Central Excise, dated the 28th August, 1995, number GSR 602 (E) dated the 28th August, 1995; or (vi) Cleared for export under bond terms of the provisions of the Central Excise Rules, 2002. We may reproduce Rule 6 (6) ..... 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