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TMI Blog2018 (11) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the department is that such brass billets or rods weighing more than 5 kgs. is not covered under exemption Notification No.8/2003-CE and the goods cleared under Notification No. 83/1994-CE without payment of duty and therefore, the intermediate goods i.e. brass billets and rods is liable for excise duty. Accordingly, the demand of duty amounting to Rs. 1,01,68,004/- was confirmed and equal amount of penalty was imposed under Section 11AC. Being aggrieved by order-in-original, the appellant filed the present appeal. 2. Shri Paritosh Gupta, ld. Counsel appearing on behalf of the appellant submits that firstly, the brass billets/ rods emerged during the course of manufacturing of final product is in process and is not excisable goods emerging in the manufacture of brass wire on job work basis. Therefore, the intermediate goods being non-excisable goods, is not liable for duty. He further submits that during the course of manufacture of brass wire, hot molten scrap is fed into the extrusion press, an uneven and crude rod shaped like product having irregular cross-sectional dimension along its length is extruded which is immediately manually fed into the coiler with the help of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such circumstances, the benefit of Notification No. 67/95-CE could not have been denied. The Adjudicating Authority has not given any justifiable reason for rejection of the claim of notification. He further submits that the demand is hit by limitation as all the relevant details regarding manufacturing process, emergence of intermediate product and availment of exemption under the notification was well within the knowledge of the department and hence, the benefit of extended period of limitation was not available to the department. The appellant have been filing classification list and declaration wherein they have claimed the exemption. Since the so called intermediate goods emerged inevitable in the course of manufacture of brass wires, there is no question of suppression of facts. The department was well aware that what is the raw material and what is the product. Therefore, when it is known that there is some product emerged at intermediate stage, the suppression of facts or mis-declaration does not exist on the part of the appellant. In support of his submission, he placed reliance on the following judgments:- (a) CCE, Triputi vs. Lanco Industries Limited - 2008 (227) ELT 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition of term 'rods' is given in Note 1(d) of Chapter 74 which reads as under:- "(d) Bars and rods Rolled, extruded, drawn or forged products, not in coils, which have a uniform solid cross-Section along their whole length in the shape of circles, ovals, rectangles ..........." On the plain reading of aforesaid definition of bars and rods, the extruded product which is not in coil form and is in a uniform solid cross-section along their whole length in the shape of circles, ovals and rectangles are only considered as bars and rods. In the facts of the present case, firstly, the so called intermediate product is not in coil form and also the product does not have uniform solid cross section along their whole length in the shape of circles, ovals, rectangles. The extruded product in the present case is having uneven cross section and therefore, there is no emergence of rods during the course of manufacture of wire. As per definition of wire given in the Chapter 74, the wire should always be in coil form. In the present case, after extrusion, the product gets converted into coil form. Hence, the product which emerged after extrusion process is wire in coil form and no any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Electronic Hardware Technology Park, or (iv) to a unit in a Software Technology Park, or (v) under Notification No. 108/95-Central Excise, dated the 28th August, 1995, or (vi) by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in rule 6 of the Cenvat Credit Rules, 2001. ........ ....... ......." From the reading of the above notification we find that the exemption is available even if the goods are cleared under exemption, subject to condition that as per Clause (vi) of proviso to notification, the manufacturer of dutiable and exempted final product should discharge the obligation as prescribed in Rule 6 of Cenvat Credit Rules, 2001. In the present case, there is no dispute that appellant is manufacturing dutiable goods on their own and it is cleared on payment of duty and also manufacturing the goods on job work basis which are cleared under exemption. As regard the discharge of obligation prescribed in Rule 6 of Cenvat Credit Rules, 2001, we find that the appellant have not availed Cenvat credit on the brass scrap received from the principal which were used for manufacture of brass wire. Accordingly, they have discharged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that Notification No. 67/95-C.E. provides that where separate records are maintained as per Rule 6 of Cenvat Credit Rules, 2004 when the input is common to exempted goods and dutiable goods, benefit of Notification No. 67/95 would be available to the inputs in respect of which Cenvat credit has not been taken and separate record has been maintained. Once the Cenvat credit itself is not taken, in respect of inputs utilized for exempted goods totally, and if this fact is coming out from the records, naturally there would be no need to maintain separate records since the very fact that credit has not been availed would be sufficient instead of making further queries and confirming the facts. Straight away proceedings have been initiated against the appellants on the ground that they were liable to pay duty on sugar syrup and it has been held to be marketable because it has a shelf life without carrying out any market enquiry and without collecting any evidence about its marketability and the fact that it has not been sold, proceedings were initiated. It is strange that only selective portion of the statement convenient to the department has been extracted in the show cause notice r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (herein after referred to as the said Special Importance Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts - (i) capital goods as defined in rule 3 of the Cenvat Credit Rules, 2002 manufactured in a factory and used within the factory of production; (ii) goods specified in column (1) of the Table hereto annexed (hereinafter referred to as input) manufactured in a factory and used within the factory of production in or in relation to manufacture of final products specified in column (2) of the said Table; from the whole of the duties of excise leviable thereon which is specified in the Schedules to the Central Excise Tariff Act, 1985 (5 of 1986) or additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act : Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of the duty of excise or additional duty of excise leviable thereon or are chargeable to nil rate of duty, other than those goods which are cleared, - (i) to a unit in a Free Trade Zone, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs, except inputs intended to be used as fuel, and manufactures such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods and take Cenvat credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. (3).................. From the above Rule 6 it can be seen that as per sub-rule (1) of Rule 6, the assessee is not required to avail the Cenvat credit in respect of the inputs used in the manufacture of exempted goods. As per the fact of the present case it is undisputed fact that the appellant has not availed the Cenvat credit in respect of any of the inputs used either in the final product or in the intermediate product i.e. packing boxes. Therefore the condition of sub-rule (1) of Rule 6 stands complied with. The finding of the lower authority that since the appellant have not fulfilled Rule 6(2). Therefore they have not discharged the obligation as required in the notification is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for captively consumed molasses has been availed. However, in all the cases the appellants have reversed the Cenvat credit attributable to exempted product. 7.2 It is the contention of the appellants that the reversal satisfies the conditions of Notification 67/95 read with Rule 6 of Cenvat Credit Rules, 2002. Notification 67/95 grants exemption from payment of duty on an intermediary product which is captively consumed for manufacture of excisable goods. Molasses is an excisable product. When molasses is used in the manufacture of some other excisable product, then he molasses captively consumed need not discharge any duty burden. However, the entitlement to Notification 67/95 is subject to a condition. The condition is that the final product should be dutiable or otherwise the exemption would not be applicable. According to Revenue, when molasses is used in the manufacture of Rectified Spirit, the Rectified Spirit, which emerges, is not excisable. Therefore, the Notification benefit cannot be available. This is the main contention of the Revenue for denying the benefit of Notification to molasses captively consumed. However, it is the appellant's contention that the molass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding is incorrect, as Para 7 of the Show Cause Notice concedes that the appellants are producing both Rectified Spirit and Denatured Spirit. In these circumstances, the demand in respect of the credit on capital goods, inputs and inputs services availed and utilized in ethanol plant cannot be sustained. They have already referred to the Show Cause Notice. In view of the above finding, the levy of penalties and demand of interest are also not sustainable. We set aside the above Orders-in- Original and allow these appeals with consequential relief." 6. As per the unambiguous legal position as discussed above, which recognized by various benches of the Tribunal in the decisions as cited above, we are of the clear view that appellant's intermediate product i.e. brass billets/rods, if any arise, is eligible for exemption under Notification No. 67/95-CE. 7. The appellant has also raised the issue of time-bar. In this regard, we find that the issue involved is that whether there is emergence of intermediate product in the course of manufacture of final product and whether the same is excisable/ dutiable. The fact regarding the use of raw material and the final product is very much in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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