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TMI Blog2017 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... s of one of the products on job work basis during the period July 2009 to September 2013. The said show-cause notice was resisted by the appellant on merits as well as on limitation. The adjudicating authority after following due process of law passed the following order: (i) Confirmed the demand raised of Neem extracts for the period April 2009 to March 2010 along with interest also imposed penalty of equivalent amount; dropped the balance demand on the product Neem extracts; (ii) Dropped the proceedings in respect of demand of Rs. 31,99,775/- on the reversal of CENVAT credit of clearances made of marigold oleoresin job work basis; (iii) Dropped the proceedings for imposition of penalties on individuals; (iv) Confirmed the demands of Rs. 21,33,533/- as an amount to be reversed for the availment of CENVAT credit of common inputs used in the manufacturing of dutiable as well as exempted products along with interest, imposed equivalent amount of penalty. 3. Learned counsel appearing on behalf of the appellant submits that as regards the confirmation of demand of Rs. 1,65,264/-, the appellant has discharged the same along with interest on being pointed out and they are contesting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court of Bombay in the case of Rallis India Ltd.: 2009 (233) ELT 301 (Bom.) to submit that waste products which arise during the course of manufacture do not arise by using inputs on which CENVAT credit are availed and if the inputs which are used for manufacturing of final products, then emergence of by-products/waste products are to be considered as an exempted goods and reversal of the CENVAT credit of an amount equivalent to percentage of the value of exempted intermediary by-products and waste should not be demanded, is the law now settled. It is his further submission that since it is an inevitable technological emergence of the Neem Oil, De-oiled cake and Husk, they need not be penalised with the amount of reversal of the 5% / 6% of the value of the exempted goods and interest and penalty thereof. 4. Learned Departmental Representative on the other hand draws my attention to the findings recorded by the adjudicating authority in paragraph 34 of the impugned order. It is her submission that the Neem Oil, which is cleared by the appellant is exempted from payment of duty by Notification No.3/2006-CE and is an excisable commodity as mentioned in the Central Excise Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and the remnant after extraction of Neem Extracts is Neem Oil, which is also used by the appellant in the manufacture of other products like fungicides and insecticides. The entire argument for confirmation of the amount by the adjudicating authority is that the said Neem Oil cannot be claimed as by-product in the ingredients of manufacturing of insecticides and fungicides but has to be considered as an intermediary product as the said Neem Oil which is technologically and commercially in the market known as final product. I find that this confirmation of demand by the adjudicating authority on his findings are without any basis and will not carry the case of the Revenue any further. When it is admitted and accepted that these products Neem Oil, De-oiled cake, Husk and Spent Meal arise during the course of manufacturing of fungicides and insecticides, the said products cannot be held as an exempted final product manufactured by the appellant. This is the law which has been settled by the apex court in the case of Hindustan Zinc Ltd. (supra) wherein their Lordships were considering provisions of Rule 57CC or erstwhile Central Excise Rules, 1944, which is pari materia of provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs in two final products i.e. one dutiable and other exempted from the applicability of the same. He submitted that when two final products emerge out of use of common inputs, one excisable and the other exempt, the provisions will apply. The question of intention of the assessee to manufacture the exempted product is not relevant. It may be intended or unintended but if what results in the course of a manufacturing process is a final product falling within the meaning of the said provisions, the provisions will apply in full with the attendant consequences. He also argued that Rule 57D uses the words waste and refuse along with by-products . The word by-product will necessarily have to take its colour and meaning from the accompanying words waste and refuse . By-products cannot, in any event, mean final products . This Rule only means that Modvat Credit cannot be denied on the ground that in the course of manufacture, non-excisable goods also arise. 23. 24. 25. These arguments may seem to be attractive. However, having regard to the processes involved, which is already explained above and the reasons afforded by us, we express our inability to be persuaded by these submis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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