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TMI Blog2024 (2) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The decision of the Hon ble Apex Court in the case of JAYPEE REWA CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, MP [ 2001 (8) TMI 1332 - SUPREME COURT] is referred by Ld. Consultant to argue that lime stone is only an intermediate product and cannot be considered as a final product. The issue that was considered in the said case was whether Modvat credit is eligible on explosives used for extraction of limestone which is the raw material used in manufacture of cement. The Hon ble Court was considering the applicability of Rule 57A of erstwhile Central Excise Rules, 1944. The assesse therein contended that explosives used in the mining operation must be regarded as inputs. The Tribunal came to the conclusion that as the inputs (explosives) had not been brought into the factory and had been used in the mines outside the factory are not eligible for credit. The Hon ble Apex Court held that even in respect of inputs used in the manufacture of intermediate product, which product is then used for manufacture of a final product (Cement) the credit is eligible. The issue in the case on hand is not on the eligibility of credit on explosives, and not applicable. In the case of VIK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in crusher units) and input services like Site formation services, Goods Transport Agency services, and Manpower Supply services. The appellant availed credit of duty paid on inputs (explosives, lubricants etc.,) and service tax paid on input services, as under Rule 3 of Cenvat Credit Rules, 2004. 1.1 The units at Alathiyur, Ariyalur, R.R.Nagar have separate Central Excise Registration. The appellant also owns several mines and for convenience, the limestone required by a plant is procured from the nearby mine. The Alathiyur plant has taken credit of duty/tax paid on inputs/input services used in mines adjoining to it. So also is the case with other manufacturing plants. Sometimes, when adequate quantity/quality of lime stones are not available in the respective mines, the appellant transfers lime stone from other plant. During the disputed period the Alathiyur plant (E/42338/2017, E/42232/2018) and Ariyalur plant (E/41843/2018, E/41408/2019) transferred lime stone to other plants. The lime stone is an input for manufacture of final product, viz., Cement. 1.2 As per Rule 2(d) of Cenvat Credit Rules, exempted goods means excisable goods which are exempt from the whole of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Learned Consultant, Shri. R. Parthasarathy appeared and argued for the appellant. Ld. Consultant made the following submissions: 2.1 The appellant availed Cenvat credit on Inputs, Capital goods and Input Services used in the mines and in the cement manufacturing plants. The appellant has mines nearer to all the three plants and all the mines are captive mines of the appellants and they had never sold any limestone to any other cement manufacturer. For operational convenience, and keeping in mind the cost of transportation of limestone from the mines to the respective plants, the appellant used to receive limestone consignments generally from their captive mines located nearer to the respective cement manufacturing plants. 2.2 As there were instances of shortage of the required quantity of lime stones from the captive mines nearer to their cement manufacturing plants, between 2010-11 to June 2017, they transferred limestone from their captive mines located nearer to Alathiyur plant to their Cement manufacturing plants located in Ariyalur and also in RR nagar plant located in Virudhunagar District. Likewise, during the above period, limestone consignments were also tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above observations of the Apex Court that lime stone is intermediate product, it is erroneous to conclude that lime stone is a final product so as to bring the stock transfer of limestone under the provisions of the Rule 6(3) of the Cenvat Credit Rules. The appellant further submits that the view in the above case was affirmed by Hon ble Supreme Court in VIKRAM CEMENTS vs CCE, INDORE (2006-194-ELT-3 SC) 2.6 The appellant contends that in order to come under the provisions of the Rule 6(3) of the Cenvat Credit Rules, a manufacturer has to produce two final products, of which, one should be dutiable and the other should be an exempted final product. In the Show Cause Notice, in the Order-in-Original as well as in the Order-in-Appeal, the reference is confined to only one alleged final product, namely, Limestone, which, as per the Rulings of the Apex Court cited supra, are at best to be construed as intermediate goods only. The appellant contends that merely because limestone attracted NIL Duty, the provisions of Rule 6(3) are not applicable in their case and it is not possible to treat limestone as FULLY EXEMPTED FINAL PRODUCT . To support this contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant the quantification of demand under Rule 6(3) of the CCR Rules, is contrary to the ratio laid down in the above decisions. 2.9 The appellants further submit that the law laid down in DCW case (supra) was followed in the following cases : a. CCE Puducherry vs Tanfac Industries Ltd. (2010 -262 -ELT- 1123 -TRI Chennai) wherein in para 2 it was observed: 2. there is no dispute that both the products are excisable /dutiable. It is only when the same goods are cleared to certain categories of customers stipulated in the Notification above mentioned that they do not attract duty liability. This does not make the goods in question non dutiable or exempt. I am fortified in my view by the decisions of Tribunal in Greaves Ltd. vs Commr. of Central Excise, Chennai (2007-211-ELT-563-TRI Chennai and Commr.of Central Excise, Madurai vs DCW (2009-234-ELT-163-TRI Chennai). The above decisions are in the context of Rule 57 CC of Central Excise Rules, 1944. Rule 6, which is the relevant rule in the present case, is pari-materia with Rule 57 CC in the sense that both require manufacture of two categories of product, namely, one excisable and the other exempted. b. Greaves Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst appellant and adjudicated by the Jurisdictional authorities and on appeal, the Commissioner of Central Excise (Appeals) Tiruchirappalli, by his Order in Appeal No. 5/2020 TRY (CX) dated 31.1.2020 set aside the order of the adjudicating authority with a finding that in relation to stock transfer of limestone to other units of the appellants, the provisions of the Rule 6(3) of the CCR Rules, would not be attracted. 2.11 The appellant contends that in their case limestone transferred to other units is not a final product attracting duty of excise and the said limestone was only a raw material or intermediary goods for manufacture of final products, namely, clinker or cement. The appellant contends that the clearance of limestone which attracted NIL Duty is outside the provisions of Rule 6(2) / Rule 6(3) of the CCR Rules and therefore, no reversal of any amount was legally required. 3. Without prejudice to their contention of inapplicability of Rule 6(3) of CCR Rules for transfer of limestone, it is submitted that the recovery proceedings ordered and confirmed in appeal are time barred as there was no suppression of facts or any intend to evade payment of duty. The clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant during the period stock transferred certain quantity of limestone from their Alathiyur and Ariyallur plants to other plants. These plants (Alathiyur and Ariyallur) have already availed CENVAT credit of the inputs and input services used for procurement of limestone from mines near to the Cement plants. As already stated as far as these cement plants are concerned, the limestone so procured is a raw material used for manufacture of final product, viz., Cement. According to department, when the limestone is stock transferred to another plant of the appellant, the said quantity of limestone becomes a finished product, and being chargeable to Nil rate of duty, it is an exempted finished product. That therefore, the appellant ought to have maintained separate accounts for the common inputs/input services used for such exempted finished products as under sub rule (2) of Rule (6) of CCR, 2004. 7.2 For better appreciation, the definition of finished product and exempted product in Cenvat Credit Rules, 2004, are given below: Rule 2(d) exempted goods means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain separate accounts. If such separate accounts are not maintained, the manufacturer shall follow any one of the options available under Rule 6(3)(i) or Rule 6(3)(ii) to pay up the credit availed in respect of exempted goods. 7.5 The Learned Consultant appearing for the appellant has vehemently argued that the demand cannot sustain for the reason that the SCN mentions about limestone being an exempted finished product and does not mention as to what is the other dutiable product cleared by the appellant so as to make it obligatory to maintain separate accounts. It is argued that in order to apply sub-rule (2) of Rule 6 there should be two different final products. On perusal of the SCN, and order passed by the adjudicating authority, we find that there is a detailed discussion as to how limestone which is stock transferred to other units have to be considered as exempted final product. There is not much discussion in SCN that Cement is the other dutiable final product. This cannot be a reason for appellant not to comply with Rule 6(2) or Rule 6(3) of CCR, 2004. Undisputedly, the appellant is manufacturing and clearing Cement/Clinker which is a dutiable product. Merely because i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd another final product which is exempted from payment of duty or chargeable to Nil rate of duty. Invariably, there must be two different final products. It is not open to the Revenue to say that a part of the quantity of Caustic Soda Flakes manufactured and removed from the factory during the period of dispute was one final product and the remaining quantity of the same final product was another final product. The requirements of the Rule 57CC(I) were not met in this case, as rightly held by the lower appellate authority. The appeal fails and the same is dismissed. 7.7 In the case of Commissioner of Central Excise Service Tax Rajkot Vs Reliance Industries Ltd. F.O.12439-12440/2021 dated 11.10.2021 was relied by appellant. The issue considered in the said case was whether LPG removed from factory without payment of duty can be considered as an exempted final product. In the process of refining crude oil to manufacture Motor spirit, High Speed Diesel, Naphtha, which are dutiable products, LPG necessarily emerged and was cleared without payment of duty under LPG subsidy scheme. The Tribunal noted that the assesse had no intention of manufacturing LPG and being only a byp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of cement. 7.9 In the case of Vikram Cement Vs Commissioner of Central Excise 2006 (194) ELT 3(S.C.) the question that was considered was again the eligibility of credit on explosives used in captive mines. The Hon ble Apex Court held that the credit would be eligible and that the decision in the case of M/s.Jaypee Rewa Cement would apply. It was also held that CENVAT Rules in effect substituted the Modvat Rules. The issue on hand is not eligibility of credit on explosives used in captive mines, and therefore not applicable. 7.10 In the case of Vikram Cement Vs Commissioner of Central Excise, Indore 2006 (197) ELT 145 (S.C.) the earlier view that Modvat/Cenvat credit on inputs (explosives, lubricants) is eligible was affirmed. In addition, it was held that if mines are captive mines so that they constitute one integral unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods is eligible. If the mines are not captive mines but they supply to various other cement factories of different assesses, the Modvat/Cenvat credit on capital goods used in such mines is not available. The issue on hand is not eligibility of credit on capital goods and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 1/2017 to 6/2017, where limestone was stock transferred/cleared to sister units, the demand confirmed by adjudicating authority was set aside by the Commissioner (Appeals) by following the decision in the case of M/s.Jaypee Rewa Cement (supra) and Vikram Cement (supra). The above decisions have already been discussed by us. We are not in agreement with the view taken by Commissioner (Appeals). From the discussions above, on merits the issue is answered against the appellant and in favour of the Revenue. 10. The Learned Consultant has argued on the ground of limitation also. The appellant had periodically filed returns and disclosed the credit availed by them. Further, the demand has been raised on the basis of the accounts maintained by the appellant. The appellant has maintained proper delivery challans and documents for the amount of lime stone stock transferred. There is no positive act of suppression established by the department. Further, the department for the period 1/2017 to 6/2017 has set aside the demand interpreting the issue in favour of appellant. For these reasons, we find that there are no grounds for invoking the extended period. The issue on limitation is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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