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TMI Blog2021 (8) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... h the final product (anti-biotic/ organic compound ) of the appellant from the inputs HMDS is sent to the job worker for the reason that this by-product has a potential of releasing the inputs i.e. HMDS by further recovery process as 75% of such HMDS is still contained in the said by-product i.e. HMDSO. Rule 4(5) of Cenvat Credit Rules is not applicable to the given facts and circumstances. Because what has been sent to the job worker is not the inputs as such, but the by-product emerging along with final product - there is no possibility of 100% reversal of HMDSO given to the job worker. This apparent admission that the job worker has returned the returnable yield of HMDS to the appellant from HMDSO received, within 180 days thereof - I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir job worker. The quantity of process loss i.e. the quantity of waste/ scrap unrecoverable was also found missing from either job Challan or in the job register maintained for the purpose. The said amount of excise duty during the period from 1.3.2003 to 31.3.2005 has accordingly been alleged to have not been paid in contravention to the provisions of Rule 4(5) of CENVAT Credit Rules, 2002 (herein after referred to as CCR). Resultantly, a show cause notice No. V(29)15/off148/2009/4180 dated 13.12.2005 was served upon the appellant proposing the recovery of Central Excise duty amounting to ₹ 16,22,501/- along with the appropriate interest and proportionate penalty. The said proposal was initially confirmed vide Order-in-Original No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Rules has wrongly been invoked by the Department as appellant neither has sent input as such nor has sent the same after partial processing. But what infact has been sent is by-product (HDMSO) generated during the manufacture of final product from the raw material (HDMS). It is impressed upon that otherwise the inputs on which CENVAT Credit was taken has been fully used in or in relation to manufacture of the finished product. As such, the amount equivalent to the CENVAT Credit cannot be demanded from the appellant. Rule 4(5) of CENVAT Credit Rules is not actually required as the goods have been received back within 180 days from the job worker and in the process with job worker loss and generation of non-useable waste was not available. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the manufacturer shall pay an amount equivalent to the CENVAT Credit attributable to the inputs or capital goods by debiting the CENVAT Credit or otherwise, but the manufacturer can take the CENVAT Credit again when the inputs or capital goods are received back in his factory. (b) The CENVAT Credit shall be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to a job worker for the production of goods on his behalf and according to his specifications. 8. CENVAT Credit Rules, 2004 permits the Cenvat Credit of the duty paid on inputs. A bare perusal of above provisions makes it clear that: (i) where the manufacturer need to sent those inputs for any kind of processing either inputs as such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iotic/ organic compound ) of the appellant from the inputs HMDS is sent to the job worker for the reason that this by-product has a potential of releasing the inputs i.e. HMDS by further recovery process as 75% of such HMDS is still contained in the said by-product i.e. HMDSO. 10. This perusal, to my opinion, is sufficient to hold that Rule 4(5) of Cenvat Credit Rules is not applicable to the given facts and circumstances. Because what has been sent to the job worker is not the inputs as such, but the by-product emerging along with final product. The above report on record is sufficient to show that the said by-product still has potential of releasing 75% of HMDS, the input. Rest 25% is an absolute waste namely, toluene which is of no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts being sent to the job worker that too at a stage, prior to manufacture of final product from the input. Admittedly and apparently same is not the fact in the present case. The findings of the Commissioner (Appeals) are, therefore, not sustainable. Also the findings are liable to be set aside due to catena of judgments about a by-product emerging inevitably at the time of manufacture of final product, to be out of scope of any duty liability. 12. I also observe that the impugned show cause notice initially was adjudicated by Order in Original No. 21/2006 dated 27.2.2006 confirming the impugned demand. However, Commissioner (Appeals)vide Order dated 29.5.2006 had set aside the said Order in Original holding that the generation of waste ..... X X X X Extracts X X X X X X X X Extracts X X X X
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