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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 ..... of brass wire. Therefore, there is no question of demanding duty. Exemption under N/N. 67/95-CE dated 16.03.1995 in respect of the intermediate goods brass billets/rods - Held that:- In the present case, the goods manufactured by the appellant are cleared under exemption and no Cenvat credit on the inputs used in the said manufactured goods was availed, the obligation as per Rule 6(1) has been discharged by the appellant. Therefore, on the intermediate product i.e. brass billets/ rods, the Notification No. 67/95-CE dated 16.03.1995, in the appellant’s case is clearly available to them. Time limitation - Held that:- The emergence of intermediate product, if any, was in view of the department and was not suppressed by the appellant. The appellant having filed the classification list and declaration wherein they have claimed the exemption and from the declaration, it can be easily found out that what is the goods manufactured and therefore, if any intermediate product emerged, can be known by the departmental officers - there is no reason to allege suppression of facts on the part of the appellant - demand is hit by limitation for the extended period. Appeal allowed - decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like pickling, drawing etc. to obtain brass wire having uniform cross-sectional dimensions along its whole length which is the finished product for the appellant. At the stage when the department has contended that it is an excisable product, the product which comes into existence during the course of manufacture of brass wire is used in a continuous and uninterrupted manner and in a red hot condition, the said product never attains a status of marketable. He further submits that as per the nature of the product, the same cannot be considered as rods classifiable under Chapter 74 as the said product did not have uniform solid cross section along their whole length as described under the said Chapter note 1(d) and (f) of Chapter 74 of the tariff and therefore, the goods are not excisable goods and at the intermediate stage duty cannot be demanded. He further submits that the department has not adduced any evidence to allege that existence of excisable and dutiable product in the nature of rods. Therefore, there is a bald allegation that the product is rod and is excisable. He further submits that it is a settled legal position that onus to prove that the product is goods within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited vs. CCE, Belgaum 2007 (212) ELT 234 (Tri. Bang.) (d) Funskool (India) Limited vs. CCE, Goa 2017 (357) ELT 434 (Tri. Mumbai) 3. Shri Jeetesh Nagori, Ld. Additional Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that there is no dispute that there is intermediate product emerged during the course of manufacture of brass wires on job work basis which are cleared under exemption Notification No. 83/94-CE dated 11.04.1994. Therefore, the appellant has failed to discharge the excise duty on the intermediate product and the Adjudicating Authority has rightly confirmed the demands. 4. We have carefully considered the submissions made by both the sides and perused the record. We find that in the show cause notice as well as in the adjudication order, the benefit of Notification No. 83/94-CE dated 11.04.1994 was extended to the appellant for the reason that no duty was demanded on the brass wire. However, the excise duty was confirmed on the intermediate product i.e. brass billets/rods which emerged during manufacturing of brass wires on job work basis for the principal who are availing exemption under Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product is rod, since the same is in hot molten stage, it is not marketable and cannot be bought and sold in the market. In view of the above, we are of the considered view that the product on which the lower authorities have demanded duty does not emerge as an intermediate product during the course of manufacture of brass wire. Therefore, there is no question of demanding duty. 5. Without prejudice to our above finding, we also find that the appellant have claimed exemption Notification No. 67/95-CE dated 16.03.1995 in respect of the intermediate goods brass billets/rods on which the demand has been confirmed. The said notification is reproduced:- Exemption to all capital goods and inputs if captively consumed within the factory of production. - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), (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 goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer of dutiable and exempted goods and provider of taxable and exempted services.- (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2). Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. From the reading of the above Rule, if the appellant are manufacturing exempted goods, they are not supposed to take Cenvat credit. In the present case, the goods manufactured by the appellant are cleared under exemption and no Cenvat credit on the inputs used in the said manufactured goods was availed, the obligation as per Rule 6(1) has been discharged by the appellant. Therefore, on the intermediate product i.e. brass billets/ rods, the Notification No. 67/95-CE dated 16.03.1995, in the appellant s case is clearly available to them. This issue has been time and again examined by vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. prays and argues that the matter should be remanded, we are not inclined to do so, since the categorical submission made in a statement recorded under Section 14 of Central Excise Act, 1944 before a Gazetted officer of the Revenue has not been contradicted. No investigation has been conducted, no verification has been done and instead only convenient portions have been utilized for initiating proceedings. When a portion of the statement has been used for making out a case, another portion of the statement cannot be ignored or held to be false without any evidence. In view of the above, we come to the conclusion that appellants can be said to have maintained separate records in view of the categorical submission of Shri Mohanan that they stopped taking Cenvat credit in respect of inputs used for exempted goods from 2007 itself. We consider that this contention has to be accepted. In view of the above, even though only stay application has been listed, we allow the appeal itself in view of the fact that the most important part of any investigation i.e. to ascertain facts, apply law to the facts and propose action in accordance with law has not been followed in this case. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) to a unit in 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. TABLE Description of Inputs Description of final products (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than [light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol. All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :- matches; (i) fabrics of cotton or man-made fibres (ii) falling under Chapter 52, Chapter 54 or Chapter 55 of the First Schedule to the said Act; fabrics of cotton or man-made fibres (iii) falling under heading No. 58.01, 58.02, 58.06 (other than goods falling under sub-heading No. 5806.20), 60.01 or 60.02 (other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 6(2). Therefore they have not discharged the obligation as required in the notification is misleading and absolutely incorrect for the reason that as per clause (vi) of the proviso to Notification, it does prescribe the obligation under Rule 6 only and Rule 6(1) and Rule 6(2) are alternative to each other. Therefore since the appellant have not availed Cenvat credit it is squarely covered under Rule 6(1). Rule 6(2) applies only in such cases where the assessee avails the Cenvat credit and follows the condition of Rule 6(2) such as payment of 8% of the value of the goods or maintaining separate account in respect of dutiable and final product and reversal of proportionate credit etc. which is not applicable in the present case as the appellant have not availed the Cenvat credit at all in respect of any of the inputs, therefore they have discharged the obligation as required under Rule 6(1). We are therefore of the considered view that the appellant have discharged the obligation under Rule 6(1) accordingly they are legally entitled for the exemption Notification No. 67/95-C.E., dated 16-3-1995 in respect of their intermediate product i.e. packing boxes. The impugned order is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Notification to molasses captively consumed. However, it is the appellant s contention that the molasses is not completely used for the production of exempted/non-dutiable product because a part of Rectified Spirit is converted to Denatured Spirit, which is dutiable. Our attention was invited to amendment to Notification No. 67/95-C.E. by Notification No. 31/2001-C.E. dated 1-1-2001. In terms of the said amendment, the appellants are entitled for the benefit of exemption Notification in a situation where there is manufacture of both dutiable and exempted final products, provided the manufacturer discharges the obligation prescribed in Rule 57AD of the Central Excise Rules, 1944, which is pari materia with Rule 6 of the Cenvat Credit Rules, 2002. This is the point urged by the appellants. What is the obligation under Rule 6 of the Cenvat Credit Rules, 2002? The obligation under Rule 6 of Cenvat Credit Rules is that when a manufacturer uses input both for exempted and dutiable final products, he should maintain separate accounts because no Cenvat credit is available for the inputs used in exempted products. There is an option for the manufacturer not to maintain two separate acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same is excisable/ dutiable. The fact regarding the use of raw material and the final product is very much in the knowledge of the department inasmuch as the appellant manufacturing the same product other than for job work and discharging excise duty. Therefore, the emergence of intermediate product, if any, was in view of the department and was not suppressed by the appellant. The appellant having filed the classification list and declaration wherein they have claimed the exemption and from the declaration, it can be easily found out that what is the goods manufactured and therefore, if any intermediate product emerged, can be known by the departmental officers. Accordingly, we find that there is no reason to allege suppression of facts on the part of the appellant. Therefore, in our view, the demand is also hit by limitation for the extended period. 8. As per our above discussion, the demand of duty on alleged intermediate product is not sustainable on both all counts as discussed above. Penalties being consequent to the confirmation of demand also do not survive. Accordingly, the impugned order is set-aside and the appeal is allowed. (Order pronounced in the open cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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