Custom, Excise & Service Tax Tribunal
C.C.E., Meerut Ii vs Maa Mangla Ispat Pvt. Ltd on 25 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-III Date of hearing/decision: 25.3.2013 Central Excise Appeal No. 2729 of 2010-SM and Cross Objection No.131 of 2011 Arising out of the order in appeal No.167/RPR-I/2010 dated 06.05.2010 passed by the Commissioner (Appeals I), Customs & Central Excise, Raipur (C.G.). For Approval and Signature: Honble Mr. Rakesh Kumar, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? C.C.E., Meerut II .. Appellant Vs. Maa Mangla Ispat Pvt. Ltd. . Respondents
Appearance:
Shri R.K. Mathur, A.R. for Revenue Shri Piyush Kumar, Advocate for the respondent Coram: Honble Mr. Rakesh Kumar, Technical Member Final Order No. Per Rakesh Kumar:
The respondents are manufacturer of sponge iron from iron ore fines. The iron ore brought to the factory is subjected to process of sieving for removing iron ore fine below 5 mm, as the same cannot be used in the manufacture of sponge iron. The iron ore consisting of iron particle below 5 mm called iron ore fines were being cleared by the respondent without payment of duty. The sponge iron being manufactured by the respondent was being cleared on payment of duty. Since for bringing the iron ore and other inputs to the factory of the respondent DTA services were used in respect of which cenvat credit of Rs.1,00,510/- had been availed, the department was of the view that the respondent did not exercise option of maintaining separate account and inventory of input services used for manufacture of the excisable and exempted final product and taking credit only on such quantity of input services were actually used for manufacture of sponge final products in respect of clearances of iron ore fine, the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 would become applicable and in respect of the same an amount equal to 10% of the sale value would be payable. On this basis, after issuance of shown cause notice the Assistant Commissioner vide order in original dated 25.11.2009 confirmed the demand of Rs.1,00,510/- along with interest under rule 6(3) read with Rule 14 of Cenvat Credit Rules, 2004 and imposed penalty of equal amount. On appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) vide order in appeal dated 6.5.2010 set aside this order in original on the ground that neither emergence of the iron ore fines is an exercisable product nor the GTA service can be said to be commonly used in the manufacture of dutiable and final product. Against this order of Commissioner (Appeals), the Revenue has filed this appeal on the ground that iron ore fine is excisable goods and cannot be called exempted goods within the meaning of definition of this term as defined in Cenvat Credit Rules, 2004. The respondent have also filed cross objection.
2. Heard both the sides.
3. Shri R. K. Mathur, ld. Departmental Representative appearing for the Revenue, has assailed the impugned order by reiterating the grounds of appeal and emphasized that iron ore fine is an excisable goods as the same is specifically mentioned in the Central Excise Tariff and since iron ore fine is fully exempt from duty under Notification No.4/06-CE dated 1.3.06, the same is an exempted final product. He pleaded that since GTA service has been used for exempted final product as well as dutiable final product, in respect of clearances of exempted final product - iron ore, fine the provisions of Rule 6(3)(b) of Cenvat Credit Rules, 2004 would be attracted. He therefore, pleaded that Commissioner (Appeals)s findings that on the iron ore fine as not excisable goods is not correct. Shri Mathur also pleaded that the extended period has been correctly invoked as clearances of iron and ore fines were not declared in the ER-1 returns.
4. Shri Piyush Kumar, Advocate, the ld. Counsel for the respondent pleaded that iron ore fine emerges as an inevitable waste in course of sieving iron ore before being used in the manufacture of sponge iron even in this case, if the respondent want, they cannot comply with the provision of Rule 6(2) of Cenvat Credit Rules, 2004. In support of this contention, he relied upon the decision of Honble Bombay High Court in the case of Rallis India Ltd. vs. Union of India reported in 2009 (233) ELT 301 (Bom.). He therefore, pleaded that there is no infirmity in the impugned order.
5. I have considered the submission made from both sides and perused the record. In this case, the iron ore fine emerges as an inevitable waste while screening and sieving the iron ore for removal of smaller particles prior to manufacture of sponge iron. The provisions of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules, 2004 are applicable when a manufacturer consciously manufactures two products an excisable and the other fully exempted product using common inputs and /or input services. In such circumstances, in terms of the provisions of Rule 6(2) the manufacturer is required either to maintain separate account and inventory for the input and input services which are used in the manufacture of dutiable and exempted final product and avail cenvat credit only in respect of inputs/input services used in the manufacture of dutiable final product and if he does not maintain such separate account and inventory, he would be required to pay an amount equal to 10% of the value of the exempted final product at the time of clearance . In this case, I find that iron ore fine has emerged as an unavoidable and inevitable waste and compliance with the provisions of Rule 6(2) is impossible. The provisions of Rule 6(3)(b) of Cenvat Credit Rules, 2004 become applicable only if the manufacturer consciously manufactures dutiable and exempted final product using common cenvat credit availed inputs and/or input services and does not comply with the provisions sub-rule (2) of Rule 6 of Cenvat Credit Rules, 2004. It would not apply in a case like this when the exempted final product emerges as an unavoidable waste or by-product and compliance with the provisions of Rule 6(2) is impossible . In the case of Rallis India Ltd. (supra) the Honble Bombay High Court held that in such circumstances, the provisions of Rule 6 (2) would not be applicable. In view of this, I hold that there is no infirmity in the impugned order. The Revenues appeal is accordingly dismissed. Cross-objection also stands disposed of.
(Rakesh Kumar) Member (Technical) scd/ 4