9911796707
TMI Blog2023 (12) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... EVELOPMENT CORPORATION LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (10) TMI 307 - CESTAT AHMEDABAD] . The issue was whether Gujarat Mineral Development Corporation was required to pay an amount under rule 6 of the CENVAT Rules in respect of exempted product namely Silica Sand and Ball Clay when the input service was used for mining of lignite and it was held that it is clear that any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this logic demand under Rule 6 in respect of by-product is not applicable. In the present case also, the appellant has only been authorised to excavate lignite which is a raw material used by the appellant in the generation of power. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant under rule 14 of the CENVAT Credit Rules 2004 [the CENVAT Rules] read with section 11A(4) of the Central Excise Act 1944 [the Central Excise Act] with interest and penalty. 2. The issue involved in this appeal is whether the appellant is liable to pay any amount in terms of rule 6(3)(b) of the CENVAT Rules @ of 6% of the value of clay which is exempted from excise duty and arises during the course of excavation and production of the dutiable final product lignite . 3. The appellant claims that it was authorized to mine only lignite for the purpose of captive consumption in generation of electricity and it is as a geographical necessity that in the process of excavation of lignite, the removal of overburden, top surface of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.2019 confirmed the demand holding that excavation of clay is equally important as the excavation of lignite, and excavation of clay by the appellant cannot be equated to the emergence of an unintended by-product. Thus, the appellant had to maintain separate records as per rule 6 of the CENVAT Rules. 6. Shri Saurabh Dixit, learned counsel for the appellant submitted that the Commissioner committed an error in assuming that the appellant pays separate charges and intentionally gets the clay excavated separately and since it availed CENVAT credit of the service tax paid on excavation charges, the appellant should have maintained separate accounts for dutiable lignite as also the exempted clay produced by the appellant. In support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The contention of the appellant is that in order to invoke the provisions of rule 6 of the CENVAT Rules, a company must be manufacturing clay as one of the final product which is not the case since the appellant is authorised to excavate only lignite and clay that arises with the top soil in the process of excavation of lignite is an unavoidable waste which belongs to the State Government over which and the appellant has no right or ownership. 11. The issue involved in this appeal stands decided in favour of the appellant by the Tribunal in Gujarat Mineral Development Corporation . The issue was whether Gujarat Mineral Development Corporation was required to pay an amount under rule 6 of the CENVAT Rules in respect of exempted product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of the impugned order. He further submits that there is no difference between Lignite, Silica Sand and Ball Clay which are excavated in the same mining process, therefore, there are three different minerals, it cannot be considered that two product out of these three are by-product, therefore, the product namely Silica Sand and Ball Clay are also the final product as well as being exempted product, Rule 6 shall apply and appellant is required to pay an amount under Rule 6 of Cenvat Credit Rules, 2004. He placed reliance on the following judgments: xxxxxxxxxxxx 4.1 From the above it is clear that the main contract is for mining of Lignite while doing the excavation to achieve Lignite, the over burden has to be removed and this ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in various judgments as cited by Learned Counsel. Once it is established that the product in question are byproduct then it is settled in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Silica Sand and Ball Clay being a by-product, no demand under Rule 6 shall sustain. (emphasis supplied) 12. In the present case also, the appellant has only been authorised to excavate lignite which is a raw material used by the appellant in the generation of power. The appellant had engaged KSK to mine lignite and the consideration that was to be paid by the appellant to KSK was on the basis of per metric ton of lignite supplied at delivery point. For mining of lignite, it was imperative for KSK ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
