Custom, Excise & Service Tax Tribunal
Cce, Raipur (C.G.) vs M/S.Sarda Energy And Minerals Ltd on 31 May, 2013
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision:31/05/2013
Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see the order for
Publication under Rule 27 of the CESTAT (Procedure) Rules, 1982.
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publicatio
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?
Appeal No.E/1178/2011-EX(SM)
(Arising out of Order-in-Appeal No.32/RPR-I/2011 dated 23.02.2011 passed by the Commissioner of Central Excise (Appeals-I), Raipur)
CCE, Raipur (C.G.) Appellant
Vs.
M/s.Sarda Energy and Minerals Ltd. Respondent
Appearance:
Shri V.P. Batra, AR for the appellant. Shri J.M.Sharma, Advocate for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Final Order No.57005/2013 Per Rakesh Kumar:
The respondent are manufacturer of sponge iron from Iron Ore. In course of manufacture of sponge iron, first stage is crushing of Iron Ore lumps of different sizes and screening in material handling plant i.e. crusher/separator to obtain desired size of Iron ore lumps in course of which Iron ore fines are obtained. Iron Ore fines are classifiable under sub-heading 26011120 of the Tariff while the Iron ore lumps are classifiable under heading 26011110. According to the department, Iron Ore fines are fully exempt from duty and the same were being cleared by the respondent without payment of duty. According to the department since common inputs/output service have been used for the manufacture of dutiable as well as exempted final product and cenvat credit has been availed in respect of such common inputs/input services and since separate account and inventory of such input/ services used in the manufacture of dutiable and exempted final products has not been maintained, Rule 6(3) would become applicable. On this basis, the department by issue of show cause notice has demanded an amount @10% of the sale value of the Iron Ore Fines which came to Rs.7,49,472/- for the period Jan. 2009 to Feb. 2009, along with interest thereon. The show cause notice also sought imposition of penalty on the respondent. The show cause was adjudicated by the Addl. Commissioner vide order-in-original dated 29.09.2010 by which the demand, as mentioned above under Rule 6(3), was confirmed along with interest and penalty of equal amount was imposed on the respondent. On appeal to the Commissioner (Appeals), this order of the Addl. Commissioner was set aside vide order-in-appeal dated 23.2.2011 holding that the emergence of Iron ore fines in crushing of Iron Ore does not amount to manufacture and as such Iron Ore fines is not a manufactured excisable product and, therefore, Rule 6(3) read with Rule 6(2) would not be applicable. Against this order of the Commissioner (Appeals), this appeal has been filed by the Revenue.
2. Heard both the sides.
3. Shri V.P. Batra, ld. Departmental Representative assailed the impugned order reiterating the grounds of appeal in the Revenues appeal and emphasized that Iron Ore Fines is a product specifically covered by sub-heading 26011130 of Tariff and the Iron Ore Fines being fully exempt from duty, are exempted goods, as defined in Cenvat Credit Rules, 2004, that since common cenvat credit availed inputs/input services have been used in or in relation to the dutiable final products- Sponge Iron ore and exempted final products- Iron Ore Fines, and since separate account and inventory as per provisions of Rule 6(2) have not been maintained, the provisions of Rule 6(3) would become applicable, and that the Commissioner (Appeals)s order setting aside the demand under Rule 6(3) is incorrect, as he has wrongly held that Iron Ore Fines is not a manufactured product. He, therefore, pleaded that the impugned order is not sustainable
4. Shri J. M. Sharma, ld. Counsel for the respondent, pleaded that Iron Ore Fines is not a manufactured product and hence not excisable product. In this regard he relied upon the judgment of the Tribunal in the case of CCE, Raipur Vs. Devi Iron & Power Ltd. reported in 2013 (287) ELT 494 (Tribunal-Delhi) and also Final Order No.1474 /2010-SM(BR) dated 27.10.2010 in the case of M/s. Real Ispat & Power Ltd. , he pleaded that since Iron Ore Fines are not excisable product, the provisions of sub-rule (2) and (3) of Rule 6 would not be applicable, that in any case, Iron Ore Fines emerge at the stage of crushing of Iron Ore when fines are taken out/screened out from the raw materials handling plant, that neither the show cause notice nor the order-in-original mentioned that upto this stage, which common inputs or input services in respect of which cenvat credit had been availed, have been used, that when the department does not even mention as to which common inputs /input services have been used upto the stage of crushing of Iron Ore , the provisions of Rule 6(3) cannot be applied and that in view of this, there is no infirmity in the impugned order. He also pleaded that Revenue in its appeal has relied upon the judgment of the Larger Bench of the Tribunal in Rallies India Ltd. reported in 2007 (208) ELT 25 (Tribunal-LB) but this judgment is no longer a good law as same has been reversed by the Honble Bombay High Court vide judgment reported in 2009 (233) ELT 301 (Bombay).
4. I have considered the submissions from both the sides and perused the records. The Iron Ore Fines emerge at the stage of crushing of Iron Ore and thereafter Iron Ore fines are taken out from the raw material handling plant. Neither the show cause notice nor the order passed by the original adjudicating authority mention as to which cenvat credit availed inputs and/or input services have been used upto this stage. When the show cause notice and the order-in-original do not even mention as to which common cenvat credit availed inputs/input services have been used upto the stage of crushing of Iron Ore at which stage Iron Ore Fines emerge, on this very ground itself, the demand under Rule 6(3) would be liable to be set aside. Moreover in this case, even if, there are some common inputs/input services and the assessee wants to comply with the provisions of sub-rule (2) of Rule 6 by maintaining separate account and inventory of input and input services meant for dutiable and excisable product, it is not possible as the Iron Ore Fines emerge as an unavoidable and inevitable byproduct. The provisions of Rule 6(2) read with Rule 6(3) cannot be interpreted to cast an obligation on an assessee which is impossible and thereafter penalize him for failure to discharge an impossible obligation. Lex non Cogit ad impossibilia is a well settled legal principle which is applicable to taxation matters also. For this reason also, the impugned order is not sustainable. In view of this, the departments case is not sustainable. I, therefore, do not find any infirmity in the impugned order. Revenues appeal is dismissed.
(Rakesh Kumar) Member (Technical) Ckp.
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