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TMI Blog2021 (12) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... d to follow the procedure prescribed under Rule 6 (3A). It is found that the appellant has been reversing the credit on a monthly basis and ideally they should have followed the procedure prescribed under Rule 6 (3A) for first ascertaining provisionally the proportional amount of credit required to be reversed and thereafter finalizing it in terms of Rule 6 (3A). However, the substantial benefit available in the law cannot be denied simply because the appellant had failed to follow the procedure prescribed in the law. The appellant have claimed that the reversal made by them is the exact amount that they were required to reverse. The other issue involved in the instant case is if the appellants are required to reverse the credit taken on HDPE bags and Soda Ash captively consumed for manufacture of salt - HELD THAT:- The appellants have categorically stated that they have paid duty on the captively consumed soda ash. They have also reversed entire credit taken on HDPE Bags. These facts needs verification. The matter is remanded to the original authority. The appellant should submit the final data to substantiate the amount of credit required to be reversed in terms of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd pet coke used in the generation of electricity at the captive power plant. Appellants were availing CENVAT credit on purchase of furnace oil and pet coke, used as fuel for generation of electricity, which in turn was utilized in manufacture of both dutiable goods (soda ash) and exempted goods (salt). No separate records were maintained and no CENVAT credit was reversed prior to 16.05.2005 in view of exception made for inputs used as fuel under sub-rule (2) of Rule 6 of CENVAT Credit Rules, 2004. Show Cause Notice No. V.JMR/AR-Dwarka/ADC/019/2006 dated 09.03.2006 issued to the Appellants, proposing to deny and recover CENVAT credit of ₹ 20,30,378/- for the period 01.10.2001 to 15.05.2005, being proportionate CENVAT credit availed on inputs used as fuel for generation of electricity supplied for manufacture of exempted goods. The demand of ₹ 20,30,378/- proposed in show cause notice dated 09.03.2006 for the period 01.10.2005 to 15.05.2005, was confirmed by the Ld. Additional Commissioner of Central Excise, Rajkot vide Order-in-Original No. 25/ADC/2006 dated 27.09.2006. Commissioner (Appeals) of Central Excise, Rajkot vide Order-in-Appeal No.99/2007/COMMR(A)/RAJ dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used at soda ash plant and some portion of soda ash is cleared to salt plant for manufacture of salt, which is an exempted goods. (iii) Denial of CENVAT credit of ₹ 15,85,909/- availed on HDPE bags used for packing of soda ash which was further used in the manufacture of exempted goods like salt, during 2001-02 to 2005-06. 2.3 Commissioner of Central Excise, Rajkot vide Order-in-Original No. 23/Commr/2007 dated 21.08.2007, adjudicated the show cause notice dated 19.05.2006 and confirmed the entire demand of ₹ 25,34,77,735/-. Aggrieved by the aforesaid Order-in-Original dated 21.08.2007, the Appellants filed an appeal along with stay application before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) vide Appeal No. E/1227/2007 and Stay Application No. E/S/1242/07. Tribunal vide Final Order No. A/1243/2008-WZB/AHD dated 25.06.2008 decided the Appeal No. E/1227/2007 filed by the Appellants pertaining to the demand raised by show cause notice dated 19.05.2006. The Tribunal ordered in following manner: (i) The Appellants offered to reverse an amount equal to 10% of the value of steam or electricity generated from the pet coke and furnace oil. The said co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not be allowed on such quantity of inputs used in manufacture non dutiable/ exempted goods. 2.5 Rule 6(2) of Cenvat Credit Rules requires that the manufacture engaged in manufacturing of dutiable and exempted goods from common inputs on which cenvat credit have been availed, should maintain separate accounts for receipt, consumption and inventory of common inputs. For assessees not maintaining such accounts, the Rule requires that they should reverse an amount equal to 10% of the value of the exempted finished goods under Rule 6(3) of Cenvat Credit Rules. The appellant had not maintained separate accounts of received consumption and inventory of inputs meant for used in manufacture of dutiable finished goods and exempted finished products and they were allegedly required to reverse an amount of 10% of the value of exempted finished goods cleared by them under Provision of Rule 6(3) of Cenvat Credit Rules. The common cenvatable inputs identified in the Show Cause Notice were pet coke and other inputs used for generation of electricity and HDPE bags/ Jumbo Bags used for manufacture of salt. Accordingly, the demand @ 10% on the total value of salt cleared by the appellant was rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation was made: 9 . In view of the discussions above, the conclusions on the appeal before us are as under :- (a) The duty payment on steam made by the appellants is considered to be adequate in terms of Rule 6. However, the correctness of the duty paid requires to be verified and the matter is remanded to the original Adjudicating Authority for the limited purpose of verifying the correctness of the duty paid on steam by the appellants. (b) The duty demand of ₹ 2,77,15,038/- is set aside in view of the fact that the appellants have paid duty on soda ash used in exempted products. The correctness of the quantity of soda ash and the payment of duty on the same requires to be verified and for this limited purpose the case is remanded back to the original Adjudicating Authority. (c) The demand for ₹ 15,85,909/- on HDPE bags used for packing of soda ash captively consumed is also set aside. 2.7 He pointed out that following periodical Show Cause Notices were issued on identical grounds: Sl. No. S.C.N. No. Date Period covered in the S.C.N. Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Superintendent alongwith the details thereof. Subsequently, they were required to determine amount for final reversal by following the procedure prescribed under Rule 6(3A)(c) of the Rules, at the end of the financial year and adjust the provisional reversed amount by the 30th June of subsequent F.Y. i.e. by 30.06.2009, as provided under Rule 6(3A)(g) ibid read with provisions of Rule 6(3A)(d) and (h) of the Rules. 2.10 Learned Counsel argued that the appellant have reversed the amount required to be reversed under Rule 6. It was argued that the demand has been confirmed solely on the ground that the appellant have not followed the procedure of first provisionally reversing the amount and later giving the final calculation. Learned Counsel argued that this is only a procedural issue and substantive rights should not be denied on that ground. 2.11 Learned Counsel pointed out that another issue raised relates to demand on the ground that the appellant had used HDPE bags/Jumbo bags for packing of exempted Soda Ash which was consumed captively for manufacture of salt during the period of 01.01.2008 to 30.09.2008. Learned Counsel pointed out that the appellant had paid duty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in common inputs in their electricity generation process on which they are availing Cenvat Credit. The appellant have used these common inputs for generation of steam which in turn is used partly for generation of electricity and partly in the process of manufacture of Soda Ash/salt plant in terms of Rule 6 of Cenvat Credit Rules, 2004. Since, the appellant were availing Cenvat Credit of common inputs which were used for both dutiable and exempted final product. The appellants were required to follow the prescription of Rule 6 of the Cenvat Credit Rules. During the period involved in Appeal No. E/11023/2017 i.e. for period for 01.04.2008 to 30.09.2008, the appellant have reversed the Cenvat Credit on an estimate basis every month. The demand has been confirmed essentially on the ground that the appellant have failed to follow the procedure prescribed in Rule 6. The OIO observes as follows:- 5.1 After observing this , the Commissioner examined the data of credit reversal declared by the appellant in their ER-1 returns and came to the following conclusion. 5.2 On the basis of the above observation the Commissioner has denied the benefit of option (II) g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted product in respect of the final products viz. Iodized salt/vacuum salt has to be accepted. Even though the amount payable on electricity is higher than what is payable on steam, we feel that it would be appropriate if the amount is calculated on the cost of steam and not electricity since electricity comes after the steam but before the final product viz. Iodized salt vacuum salt. Further once the amount is paid on steam, the requirement of Rule 6(3)(b) is fulfilled and therefore we do not find any need to consider the arguments advanced in support of their claim that reversal of credit would amount to not taking the credit at all. Further other judgments cited by the party also need not have to be discussed since the requirements of Rule 6(3)(b) would get fulfilled. More over as far as the pet coke and furnace oil are concerned, steam has to be taken as a final product because electricity and other products are produced only subsequently. It is not the case of the Department or the appellant that steam or electricity are by-products and not final products as far as pet coke/furnace oil are concerned. In fact there is no other product which arises in this process. 9 . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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