Custom, Excise & Service Tax Tribunal
Devi Iron &Amp; Power Pvt Ltd vs Raipur on 17 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Excise Appeal No. 53276 of 2018 [SM]
[Arising out of Order-in-Appeal No.BHO-EXCUS-002-APP-237-18-19 dated
09.07.2018 passed by the Commissioner (Appeals), Central GST, Excise &
Customs, Raipur ]
M/s.Devi Iron & Power (P) Ltd. ...Appellant
Village - Tanda, Block-Dharsiwa,
Dharsiwa Industrial Area,
Raipur (C.G.)
Vs.
Commissioner of Customs,
CGST & Central Excise, Raipur ...Respondent
Central Excise Building, Dhamtari Road, Tikrapara, Raipur, (CG)-492001 APPEARANCE:
Shri Vinayak Kohali, Advocate for the Appellant Shri P.R. Gupta, Authorised Representative for the Respondent Coram: HON'BLE MR. RACHNA GUPTA, MEMBER (JUDICIAL) FINAL ORDER No.50705/2019 DATE OF HEARING : 11/02/2019 DATE OF DECISION: 17/05/2019 RACHNA GUPTA The appellants herein are engaged in the manufacture of sponge iron. They are availing cenvat credit of duty paid on inputs and capital goods and service tax paid on input services, as per Cenvat Credit Rules, 2004 and are utilizing such credit towards payment of duty on their final products. Department observed that while using the said input of iron ore, the appellants are 2 Excise Appeal No. 53276 of 2018 [SM] manufacturing dutiable final products, as well as the exempted goods i.e. iron ore fines, but were not maintaining the separate accounts for the receipts, consumption and inventory of the inputs as is required in accordance of Rule 6 (3) of Cenvat Credit Rule, 2004. Resultantly, it was alleged that during the period from April 2015 to March, 2016, an amount of Rs.4,29,153/- has not been paid by the appellants. The same was proposed to be recovered vide show cause notice No.801 dated 03.05.2016. The proposal was initially confirmed vide Order No.29 dated 27.02.2018. The appeal thereof was dismissed vide the Order under challenge i.e. the one bearing No.4164 dated 09.07.2018. Being aggrieved, the appellants are before this Tribunal.
2. We have heard Mr.Vinayak Kohli, ld. Counsel for the appellant and Mr.P.R. Gupta, ld. D.R. for the Department.
3. It is submitted on behalf of the appellants that iron ore fines are not distinct to iron ore, rather, these are the residual material emerging on the processing of iron ore. Thus, these are nothing more than a waste product during the manufacture of the final product of the appellant i.e. sponge iron. Hence, cannot be considered as the exempted goods and as such, Rule 6 (2) of CCR, 2004 is not attracted nor arises the question of imposition of penalty and recovery of interest. The orders under challenge are therefore, prayed to be set aside.
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Excise Appeal No. 53276 of 2018 [SM]
4. Appellant has relied upon the following case laws:-
(i) Union of India & Others vs. DSCL Sugar Ltd. reported in 2015 (322) ELT 769 (S.C.).
(ii) Rallis India Ltd. vs. Union of India reported in 2009 (233) ELT 301 (HC-Bom.).
(iii) Commissioner of Central Excise, Raipur vs. Devi Iron & Power Ltd. reported in 2013 (287) ELT 494 (Tri. - Del.)
(iv) Commissioner of C. Ex. & S.T., Raipur vs. Aarti Sponge & Power Ltd. reported in 2016 (333) ELT 415 (Tri. - Del.).
(v) Commissioner of C. Ex. Meerut-II vs. Maa Mangla Ispat Pvt. Ltd. reported in 2013 (293) ELT 380 (Tri. - Del.).
(vi) Nav Durga Fuels Pvt. vs. Commissioner of Central Excise, Raipur reported in 2016 (340) ELT 526 (Tri. - Del.)
(vii) Commissioner of Central Excise, Raipur vs. Anjani Steels Pvt. Ltd. reported in 2013 (290) ELT 715 (Tri.-
Del.)
5. Ld. D.R. on the other hand has justified the order under challenge.
6. It is submitted that the subsequent circular of board bearing No.1027/15/2016-CX dated 25.04.2016 clarifies that "bagasse" cleared for consumption from the factory need to be treated like exempted goods for the purpose of reversal of credit of input in terms of Rule 6 of Cenvat Credit Rules, 2004. It is impressed upon that there seems no infirmity in the order under challenge. Appeal is prayed to be dismissed.
7. After hearing both sides, we are of the opinion as follows:- 4
Excise Appeal No. 53276 of 2018 [SM] 7.1 The sole basis of reliance of the adjudicating authority is the Circular dated 25.04.2016. The explanation to Rule 6 of CCR, 2004, which is relevant for the Circular dated 25.04.2016 reads as follows:-
"Rule 6(1) The Cenvat credit shall not be allowed on such quantity of inputs used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provisions of exempted service except in the circumstances mentioned in sub-rule(2):
Provided that the CENVAT credit on inputs..............
Explanation 1:- For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of Rule 2 shall included non-excisable goods cleared for a consideration from the factory."
7.2 It is clear that non-excisable goods cleared for consideration, would fall within the scope of the said Rule. The contention of the Revenue is that since, the "exempted goods", "final products"
defined under the CENVAT Credit Rules, 2004 in clause (d) and clause (h), respectively include non-excisable goods, which is cleared for consideration from factory, hence Rule 6(1) is applicable to the by-product. Clause (d) and (h) of the said Rule reads as follows:-
"(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty;
(h) "final products" means excisable goods manufactured or produced from input, or using input service;"5
Excise Appeal No. 53276 of 2018 [SM]
8. The Hon'ble Supreme Court‟s decision in the matter of DSCL Sugar Ltd. (supra) has clearly laid down that bagasse is agricultural waste of sugarcane and the waste and residue of agricultural products, during the process of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in Bagasse‟s production. "Bagasse" is not „goods‟ but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules, 2004 is not applicable in the present case. "Bagasse" is bound to come into existence during the crushing of the sugarcanes and is an unavoidable agricultural waste. In the present case the iron fines are bound to emerge during crushing of iron ore used for manufacturer of final product. No extra procedure is required for emergence of iron fines. Hence, the fines cannot be called as manufactured product. The above decision of Hon‟ble Apex Court shall squarely cover the facts and circumstances of present case. The Board‟s Circular dated 25.04.2016 has no application on the facts of the instant case for two reasons. Firstly, no Circular can override the Rules as well as the law laid down by the Hon'ble Supreme Court and the orders of this Tribunal, and secondly, the said Circular was issued on 25.04.2016 i.e. on a later date, whereas the period in dispute is March, 2015 to June, 2015.
9. Further, the issue is no more res-integra.
10. The Tribunal at Mumbai in Appeal No.E/86639 & 86655 of 2018 vide Final Order No.A/87647-87648/2018 dated 17.10.2018, while relying upon M/s. Shivratna Udyog Ltd. & Others etc. vs. 6 Excise Appeal No. 53276 of 2018 [SM] Commissioner, Customs and Central Excise - 2017 (9) TMI 985- CESTAT- Mumbai has held as follows:-
"........ if any input is contained in waste by product or goods the cenvat credit shall not be denied. If rule 6(3) is made applicable in these goods this clarification will stand redundant. If legislator has intention even to apply Rule 6(3) on waste or by- product, refuse then either this para should have been amended or omitted. Since this clarification is still in force the Cenvat credit either by way of Rule 6(3) or otherwise cannot be denied. As per my above discussion, I am of the considered view that in case of removal of waste or byproduct Rule 6(3) has no application. Accordingly, the impugned orders are set aside. The appeals are allowed."
11. In view of the above, the order under challenge is hereby set aside. Appeal, accordingly, stands allowed.
[Order pronounced in the open Court on 17.05.2019] (RACHNA GUPTA) MEMBER (JUDICIAL) Anita