Custom, Excise & Service Tax Tribunal
C.C.E.- Raipur vs M/S. Devi Iron & Steel Power Pvt. Ltd on 6 August, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI, COURT NO. IV Date of Hearing/Decision: 06.08.13 Appeal No. E/1932 & 1924/2011-EX[SM] [Arising out of Order-In-Appeal No. 81/RPR-I/2011 dt. 16.05.2011, passed by Commissioner (Appeal-I) Central Excise, Raipur] For approval and signature: Honble Sh. Rakesh Kumar, Technical Member 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the 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.- Raipur Appellant Vs. M/s. Devi Iron & Steel Power Pvt. Ltd. Respondent
Present: - Sh. A.K.Jain, AR - for the appellant Ms. Tuhiana, Advocate - for the Respondent Coram : Rakesh Kumar Member (Technical) FINAL ORDER NO: 57335-57336/2013 Per Rakesh Kumar:-
The facts leading to this appeal and cross objection are in berief as under:-
1.1 The respondent are manufacturers of Sponge Iron, the raw material for which are iron ore and coking coal. In course of handling of coal, waste in form of coal fines arises which is sold out by the respondent without payment of duty. Similarly in course of crushing of iron ore lumps and screening of crushed ore to get the iron ore lump of the desired size, iron ore fines arise which can not be used in manufacture of sponge iron and are cleared without payment of duty The respondent have taken Cenvat Credit in respect of GTA Service for transportation inputs and also in respect of lubricants used in the machinery. The Department was of the view that since Cenvat Credit has been availed in respect of common input and input service Used in the manufacture of exempted goods iron ore fines and coal fines and dutiable goods (Sponge Iron) and since separate account and inventory of inputs & input service meant for dutiable and exempted final products has not been maintained, the Provisions of Rule 6 (3) of Cenvat Credit Rules would become applicable and in respect of clearances of coal fines and iron ore fines, an amount equal to 10% of the sale price would be payable which has not been paid. In this regard the Departments stand is that the coal fines and iron fines arising in the respondent plant are manufactured products and hence excisable goods fully exempted from duty. On this basis in respect of clearances on coal fines, Show Cause Notice was issued for demand of an amount of Rs. 1,70,456/- for the period from Nov.08 to July08 along with interest and also imposition of penalty and in respect of clearances of iron ore fines another Show Cause Notice was issued for demand of an amount of Rs.3,48,489/- for the period from Dec.08 to April09 along with interest and also for imposition of penalty. Both the Show Cause Notice were adjudicated by Assistant Commissioner by two separate orders and demands under Rule 6(3) were confirmed along with interest and penalties of equal amount were imposed. However, on appeals being filed before the Commissioner (Appeals) against these orders of Assistant Commissioner, the Commissioner (Appeals) by two separate orders, allowed the appeals holding that iron ore fines and coal fines are not manufactured products. Against these orders of the Commissioner (Appeals), these appeals have been filed by the Department and in respect of the Department appeals, the respondent have filed cross objections.
2. Heard both the sides.
3. Sh. A.K.Jain, learned Jt. CDR assailed the impugned order by reiterating the grounds of appeal in the Revenues appeal and emphasized that coal fines arising in course of handling of coal and iron ore fines arising, in course of processing of the iron ore lumps in the respondents plant are manufactured products attracting excise duty which is fully exempted, and hence both the products are exempted goods within the meaning of this term, as defined in Rule 2(d) of the Cenvat Credit Rules 2004, that since the respondents have availed GTA Service in respect of which the Cenvat Credit had been taken and have also availed Cenvat Credit in respect of lubricants, and since the Provision of Rule 6(2) of the Cenvat Credit Rules have not been complied by maintaining separate account and inventory of the inputs and input services meant for exempted and dutiable final products, the provisions of Rule 6(3) of Cenvat Credit Rules would be attracted and demands confirmed under Rule 6(3) have been wrongly set aside.
4. Ms.Tuhina, ld. counsel for the respondent, defended the impugned order by reiterating the findings of Commissioner(Appeals) in the impugned order and also cited the judgments of the Tribunal in the case of CCE, Raipur Vs. Devi Iron & Power Ltd. reported in 2013(287) ELT-494, CCE Meerut Vs. Maa Mangla Ispat Pvt. Ltd. reported in 2013(293) ELT-380 and also the judgment of Honble Bombay High Court in the case of Rallis India Ltd. Vs. Union of India reported in 2009(233) ELT-301.
5. I have considered the submissions from both the sides and perused the records. The provisions of Rule 6(3) read with Rule 6(2) of the Cenvat Credit Rules 2004 are attracted when a manufacturer using common inputs and/or input services, manufacturers dutiable final products as well as exempted final products and is not maintaining separate account and inventory of the inputs and/or input services meant for manufacture of dutiable final products and exempted final products. Thus for invoking the Rule 6(3) read with Rule 6(2) there must be:-
(a) Conscious manufacture of dutiable final product and exempted final product using common Cenvat Credit availed inputs and/or input services; and
(b) Non maintenance of separate account and inventory of inputs and/or input services meant for manufacture of dutiable and exempted final products.
5.1 In this case the iron ore fines arise as inevitable and unavoidable waste in course of processing of iron ore lumps and similarly the coal fines arise as inevitable and unavoidable waste in course of handling of coal in the respondents plant. The compliance with the provisions of Rule 6(2) regarding maintenance of separate account and inventory of cenvated inputs and input services meant for dutiable final products and exempted final products in such a situation is impossible and it is absurd to expect to comply with this provision in such a case. The provisions of Rule 6(2) read with 6(3) can not be construed to impose an obligation on a manufacturer which is impossible to comply and then go on to penalise him by demands of amounts under Rule 6(3) and penalty for failure to comply with the obligation which is impossible. Lex non cogit ad impossibilia is a well settled legal principle which is applicable to tax matters also. Honble Bombay High Court in the case of Rallis India Ltd. Vs. Union of India reported in 2009(233) ELT-301 (Bom.) has held that the Provisions of Rule 57CC of Central Excise Rules, 1944, which is in pari materia with the provisions of Rule 6(3) read with Rule 6(2) of Cenvat Credit Rules, 2004, do not apply when while manufacturing a dutiable final product by using Cenvat Credit availed inputs, an inevitable by product fully exempt from duty also arises. I find that same view has been taken by Tribunal in the respondents own case for the previous period reported in 2013(287) ELT-494 and also in the case of CCE, Meerut Vs. Maa Mangla Ispat Pvt. Ltd. reported in 2013(293) ELT-380 (Supra). In view of this I do not find any merit in the Revenues appeals. The same are dismissed. The cross objections stand dispose of.
[Order dictated in the open court] (Rakesh Kumar) Member (Technical) S.Kaur 1