Custom, Excise & Service Tax Tribunal
Cce, Raipur vs M/S Devi Iron & Power Ltd on 6 September, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No.2526 of 2010
[Arising out of Order-In-Appeal No.137/RPR-I/2010, dated 07.04.10 issued by CCE, Raipur]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
CCE, Raipur Appellant
Vs.
M/s Devi Iron & Power Ltd. Respondents
Coram: Honble Ms. Archana Wadhwa, Judicial Member Appearance:
Ms. Shweta Bector, DR for the Appellant Ms. Neha Gulati, Adv. for the Respondents Date of Hearing/decision : 06.09.2012 ORDER NO . _________ Per Ms. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. I have heard both the sides.
2. As per facts on record, respondent is engaged in the manufacture of sponge iron. They are also availing benefit of input service credit. During the manufacture of sponge iron, fine particles come into existence, which are being called as iron ore fines. The said iron ore fines are being cleared by the appellant without payment of duty in terms of exemption Notification No.4/06.
3. The Revenues case is that the input service stands utilised in the manufacture of dutiable, i.e., sponge iron as also non-dutiable goods, i.e., sponge ore iron fines and as such, input service credit is required to be paid to the extent of 10% in terms of the provisions of Rule 6(3)(b). Accordingly demand was raised against the respondent and confirmed to the extent of Rs.7,72,286/- by the original adjudicating authority. However, on appeal, Commissioner (Appeals) set aside the same by observing as under:-
The definition or test more commonly used for as ascertaining whether manufacture for the purpose of attracting Central Excise levy has taken place or not is the one evolved by Honble Supreme Court in DCN case 1997(92)ELT315(SC) and reiterated in UOI v. Parle Products Ltd. 1994(74)ELT492(SC) and Ujagar Prints vs. UOI 1988(38)ELT535(SC), according to which the activity or process in order to amount to manufacture must lead to emergence of a new commercial product, different from the one with which the process started. In other words, should be an article with different name, character and used. Thus, a process which simply changes the form or size of the same article or substance would not ordinarily amounts to manufacture and no excise duty would be payable, unless in a particular case by section note of the tariff or by wording of the relevant heading or sub-heading the said process has been specified as amounting to manufacture. This was also a view of Honble Supreme Court in the same of Empire Ind. Ltd. vs. UOI 1985(20)ELT179(SC) and State of Maharashtra vs. Mohalaxmi Stores 2003(152)ELT30(SC). In the present case appellant have set up their factory to manufacture sponge iron and the raw material used by them are iron ores. They proceed lumps of such iron ore which are subjected to grading so that chunks of iron are of size, usable in their kiln, can be obtained. In process of handling, sorting, grading, screening etc. of iron lump, pieces of size upto 5 mm are also obtained, which they termed as Iron ore fines. There are not usable in the kiln for the purpose of recovery of sponge iron. Nevertheless what is obtained as iron ore fine are smaller pieces of iron ore. It continues to be the same material as that of initial iron ore but of smaller size and not usable in the factory of the appellant. Since these are not usable in the factory, the same is sold by the appellant as waste, which are usable by others for recovery of iron. It, therefore, follows that the iron ore fines is not different from the present raw material in name, character and use except in smaller size and therefore, it cannot be termed as a product which came into existence as a result of process of manufacture. Further no prudent person will establish a factory for manufacture of waste. The appellant have set up their unit for production of sponge iron. They are using iron ore as a raw material. In the process of handling, sorting, grading, screening of the raw material and to obtain iron ore of desired size to be used in the kiln, iron are fines (i.e., iron ore of smaller size not usable in the kiln) came into existence, as inevitable product which appellant are selling as waste. The input service (GTA) is used for procurement of raw material and of during processing of such raw material for the purpose of production desired product, i.e., sponge iron, some inevitable waste came into existence, it cannot be said that eh input service is used in the production of such inevitable by product/waste.
From above, it is very clearly the iron ore fines are neither exempted excisable goods being manufactured by the appellant nor the input service (GTA) is commonly used in the manufacture of dutiable and exempted goods. Therefore provisions of Rule 6(2) and 6(3)(b) of the Cenvat Credit Rules are not attracted and hence the impugned order-in-original passed by adjudicating authority is not sustainable and liable to be set aside. I hold accordingly.
4. Revenues contention is that since iron ore fines are manufactured excisable goods, they should be held as the final product of the respondent, thus attracting the provisions of Rule 6(3)(b). I find that the issue is no more res-integra and stands decided by the Honble High Court in the case of Ralis India Ltd. reported as 2009(233)ELT301(Bom.). It stands held that liability to pay amount under erstwhile rule 57CC and Rule 6 of Cenvat Credit Rules, 2004, arises only for the final products and not for the waste emerging during the course of the final product. In as much as iron ore fines emerge as waste product during the manufacture of respondents final product, it stands rightly held by Commissioner(Appeals) that they do not attract the provisions of Rule 6(3)(b). As such I find no infirmity in the impugned order of Commissioner(Appeals). Revenues appeal is accordingly rejected.
(Pronounced in the open Court)
(Archana Wadhwa) Member(Judicial)
RK-I
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