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TMI Blog2017 (7) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... l basis for the assertion made by the Revenue to arrive at the proportion of Cenvat credit to be reversed, should be based on value of exempted products. In the present case, all the inputs have been put to intended use and it is not the case that some portion of input is not put into use in the manufacture of zinc and lead. This position has been admitted by the Revenue also. If such is the case there can be no input which is solely attributable to the manufacture of small quantity of by-product namely, silver. The said silver is extracted as a by-product by the respondent whose intended/main manufacturing process is aimed at manufacture of non-ferrous metal like zinc and lead. The respondent also obtain various other by-products like sulphuric acid etc. In fact with reference to sulphuric acid emerging as a by-product, it was held in the respondent’s own case that there is no need for reversal of Cenvat credit on proportionate basis in Hindustan Zinc Limited Vs. CCE, Jaipur – II [2004 (1) TMI 283 - CESTAT, NEW DELHI]. The respondents fulfilled the condition as stipulated in the Finance Act, 2010 by reversing proportionate credit in 2002-2003 itself and by paying interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent of their own worked out the Cenvat credit attributable to the production of silver and reversed the same. An amount of ₹ 2,18,148/- was reversed on this account, during 2002-2003. Demand notices were adjudicated by the Original Authority who vide the impugned order dropped the proceedings against the respondent. He held that in terms of Rule 6 (2) of Cenvat Credit Rules, 2001, the inputs on which Cenvat credit has been availed are common to both dutiable and exempted final products and it was not possible for the respondent to maintain separate account of inputs used for exempted goods. Applying the provisions of Section 69 to 72 of Finance Act, 2010 which introduced retrospective amendments regarding the option given to the assessees for reversal of proportionate Cenvat credit, the Original Authority held that the respondents are eligible for the said provision. It was also recorded that the amount of Cenvat credit reversed has been certified by Chartered Accountant and got verified from the Jurisdictional Deputy Commissioner who also agreed that reversal of these proportionate Cenvat credit has been done by the respondent. Accordingly, the Original Authority held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to silver. Still, in order to close the matter without further dispute, the respondents reversed proportionate credit attributable to the inputs used for such silver. They have produced the Chartered Accountant certificate in support of their calculation. 5. Regarding applicability of the retrospective scheme for reversal of proportionate credit, as introduced in the Finance Act, 2010 it is submitted that the respondents have reversed ₹ 2,18,148/- during the financial year 2002-2003 itself. The payment of differential interest due to difference in calculation as pointed out by Revenue has been made in terms of the provision of Finance Act, 2010. When they have paid the proportionate Cenvat credit in 2002-2003 itself, as admitted by the Revenue, the payment of differential interest after intimation to Revenue, cannot be held against them to deny the applicability of the provision of Finance Act, 2010. The learned Counsel relied on various decided cases in respect of respondent s own unit dealing with provision of Cenvat Credit Rules in respect of by-products manufactured by them. 6. We have heard both the sides and perused the appeal records. The Original Authority dropp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible. The Revenue further admitted that quantification of proportionate quantity of input used in exempted goods is not possible in the case like the present one. However, after admitting these factual position, it is contended by the Revenue, that the criteria to find out proportionate quantity of input used in exempted goods should be based on value of exempted goods. We find no legal basis or logical reason for such a proposition. The Revenue drew a parallel from the CAS-4 Standard for costing used for ascertaining cost of production for captive consumption. Reference was made to joint cost etc. We find such reference to costing of captive consumption has no relevance to the issue at hand. We find no legal basis for the assertion made by the Revenue to arrive at the proportion of Cenvat credit to be reversed, should be based on value of exempted products. 8. It is to be noted here that he Board vide Circular dated 09/05/2008 clarified as below :- 7. What is the manner for calculation of CENVAT Credit amount attributable to inputs used in or in relation to the manufacture of exempted goods. It is required to be done on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured with the same common inputs becomes understandable. This Rule did not talk about emergence of final product and a by-product and still said that Rule 57CC will apply. The appellant seeks to apply Rule 57CC when Rule 57D does not talk about application of Rule 57CC to final product and by-product when the by-product emerged as a technological necessity. Accepting the argument of the appellant would amount to equating by-product and final product thereby obliterating the difference though recognised by the legislation itself. Significantly this interpretation by the Tribunal in Sterlite (supra) was not appealed against by the department. 10. In view of the above analysis of the legal position, we find that the necessity of the respondent to reverse the proportionate credit itself appears to be not sustainable. Even so, the respondents did reverse the proportionate credit attributable to the quantum of inputs that could be considered as used in the manufacture of silver. The quantity based proportion calculated by the respondent is now being contested by the Revenue. The plea is that the final product value should form basis of such proportion. As already noted, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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