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TMI Blog2022 (1) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) for an amount attributable to input service used in or in relation to manufacture of exempted goods - only such common inputs were used, the value of such common inputs was to be used in said computation as were used for generation of such amount of electricity which was sold outside. Further a clarification in Chapter 5 of CBEC Board Circular No. 754/70/2003 CX dated 9.10.2003 says that CENVAT Credit is also admissible in respect of amount of inputs contained in waste/ refuse of by product. Similarly, the CENVAT Credit is not to be denied if the inputs are used in intermediate of the final product even if such intermediate is exempted from payment of duty. The basic idea is that CENVAT Credit is admissible so long as the input are used in or in relation to manufacture of final product whether directly or indirectly and such final products have been cleared. When the calculation arrived at by the Department and confirmed vide the order under challenge is perused (in para 18.3 of show cause notice), it is observed that the value of coal (inputs ) used in power plant and value of Coal handling service (input service) in terms of Rule 6(3A)(c ) (i) and 6 (3A(iii) has to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold outside the factory for the period 2012-2013. They also stated to have reversed proportionate credit on imports used in the power plant amounting at ₹ 21,30,058/- for the said period (totalling of ₹ 29,37,832/-). However, the department observed that the total reversal of credit of inputs service should have been for ₹ 14,82,408/- instead of ₹ 8,07,734/- and the reversal of inputs should have been for ₹ 24,99,420/- instead of ₹ 21,30,098/- (Totalling of ₹ 39,81,828/-). Accordingly, vide Show cause notice No. 8406 dated 29.5.2014 the difference of the amount reversed / short reversed amount of ₹ 10,43,996/- was proposed to be recovered from the appellants along with the interest and penalty. The said proposal was initially confirmed vide the Order-in-Original No. 179/2015 dated 29.12.2015. The appeal thereof was rejected vide Order in Appeal No. 002-APP-472-16-17 dated 15.3.2017. The appeal was preferred before this Tribunal against the said Order-in-Appeal which was allowed by way of remand vide the Final order No. A-51845/2018 dated 14.5.2018 directing the adjudicating authority for denovo re-computation of the amount as form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. Order under challenge is impressed upon as reasonable and correct. Appeal is accordingly, prayed to be dismissed. 6. After hearing both the parties and perusing the entire records, I observe and hold as follows: Following are the admitted facts in the present case (i) The appellant is manufacturing sponge iron as its final product. The power generation plant is installed by the appellant for captive consumption of the power generated. The raw material of this plant is one out of several i.e,. coal along with some waste generated during the process of manufacture of final product. (ii) Some part of the power generated is sold outside. (iii) The appellant has reversed proportionate credit of ₹ 8,07,734/- with respect to input services and of ₹ 21,30,058/- with respect to the inputs. (iv) The appellant has availed CENVAT Credit proportionately on such inputs as were commonly used for manufacture of sponge iron as well as for electricity sold outside. No separate account was maintained. 7. The department has formed an opinion that the appellant is manufacturing and selling such excisable goods which are dutiable as well as exempted and thus the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice used for manufacture of entire sponge iron and entire electricity generated. The calculation of reversal made by Revenue under the impugned order therefore, does not appears to be correct. 11. It is observed that under Rule 6(3) of CENVAT Credit Rules, 2004, it is proportionate reversal of the credit wherein the value of exempted goods (electricity herein) meant for consumptive use of the appellant was also to be excluded in computing CENVAT Credit attributable to the exempted goods and the services under Rule 6(3)(A)(c). Pursuant whereof the amount attributable in the given circumstances has to be calculated by the formula M/NxP where M is the value of the goods manufactured and removed during the financial year, and N denotes the given total and exempted goods manufactured and removed during the financial year. And P denotes the total CENVAT Credit taken on the input service during the financial year. 12. From the above observations, I am of the opinion that the value should be excluded both from the numerator i.e. M and and denominator i.e. N . The Commissioner (Appeals) while not excluding the same, was of the view that the words used in Rule 6(3A) are Total CENV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and coal handling service only to such an extent as was used for generation of such an amount of electricity which was sold outside. The amount of ₹ 10,43,996/- as has been allowed to be short reversed is therefore, held to be a wrong calculation. I draw my support from the decision of this Tribunal in the case of M/s. Sify Technologies Ltd. vs. CCE ST (LTU) Chennai [2014 -TIOL 60 CESTAT Chennai]. 15. I also while relying upon the decision in the case of M/s. Eastern Medikit Ltd. vs. CCE, Gurgaon [2009 TIOL 1022 CESTAT Del ], I hold that no penalty can be imposed under Section 11AC of Central Excise Act, 1944 in respect of alleged non payment of the amount due 6(3) CENVAT Credit Rules, 2004. In the present case it has already been held that reversal of CENVAT Credit has already been made by the appellant. The findings which respect to alleged short payment are not tenable. Question of imposition of penalty therefore, does not at all arise. 16. In view of the entire above discussion, the order under challenge is held to be wrong hence is hereby set aside. Consequent thereto the appeal stands allowed. (Pronounced in the open Court on 04-01-2022 ) - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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