Custom, Excise & Service Tax Tribunal
Cce, Jaipur-I/Jalandhar vs M/S.Goyal Proteins Ltd on 12 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/decision:16.01.2015
Appeals Nos. E/1471,1472/2006 and 723 of 2007-EX
[Arising out of Order-in-Appeal No.2-3(MPM)CE/JPR-I/2006 dated 3.2.2006 passed by the Commissioner of Central Excise (Appeals-I), Jaipur].
CCE, Jaipur-I/Jalandhar Appellant
Vs.
M/s.Goyal Proteins Ltd. Respondent
Sukhjit Starch & Chemicals Ltd.
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 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? Appearance: Rep. by Shri R.K. Grover, DR for the appellant. Rep. by Shri Surabhi Sinha and Shri A.C. Jain, Advocates for the respondent.
Coram: Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial).
Order No.50239-50241/2015 /Dated:16.01.2015 Per Rakesh Kumar:
Since the issue involved in these appeals is identical, the same were heard together and are being disposed of by a common order.
2. The respondent in appeals no.E/1471 and 1472/2006-EX (DB) are manufacturers of refined vegetable oil. The period of dispute is from 1.12.2003 to 28.02.2005. In course of refining of vegetable oil, acid oil arises. During the period of dispute while the refined vegetable oil was dutiable the acid oil was fully exempt from duty. The department invoking Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 demanded 8% of the sale value of the acid oil on the ground that the respondent have not maintained separate account and inventory of the input/input services used in or in relation to the manufacture of exempted final products and dutiable final products, while they had availed cenvt credit in respect of those input/input services. It is on this basis that the demands of the amounts of Rs.2,48,733/- andRs.1,59,704/- were confirmed against the respondent under Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 by two separate orders passed by the Asst. Commissioner along with interest thereon under Section 11 AC and equal amount of penalty were imposed. These orders of the Asstt. Commissioner were set aside by the Commissioner (Appeals) by a common order-in-appeal against which these appeals have been filed by the Revenue.
3. In case of Appeal No.E/723/2007-Excise the respondent were manufacturing Dextrose Monohydrate and Dextrose Anhydrous, which attracted central excise duty and in course of manufacture of these products, a by-product viz. Hydrol arose, which was fully exempt from duty. In this case also, since the common cenvat credit availed inputs were being used during the period of dispute from October, 1999 to September, 2004 and the department was of the view that the appellant have not maintained separate accounts and inventory of the inputs/input service meant for dutiable final products and exempted final products, by invoking Rule 6(3)(b) of the Cenvat Credit Rules 2002/2004 and earlier Rule 57 CC of the Central Excise Rules,1944 a show cause notice was issued for demanding an amount of Rs.2,65,206/- from the respondent along with interest thereon under Section 11 AB and also for imposition of penalty under Rule 13 of the Cenvat Credit Rules, 2002/2004. The show cause notice was adjudicated by the Asstt. Commissioner who vide order dated 28.1.2005 dropped the proceedings . The department filed a review appeal before the Commissioner, who vide order-in-appeal dated 31.10.2006 dismissed the Revenues appeal. Against this order of the Commissioner (Appeals), these appeals have been filed by the Revenue.
4. Heard both the sides.
5. Shri R.K. Grover, ld. Departmental Representative assailed the impugned order by reiterating the grounds of appeal and pleaded that since the respondent in these cases while using common cenvat credit availed inputs /input services in or in relation to the manufacture of dutiable final products/exempted final products, have not maintained account/inventory and have not confined the cenvat credit availment only to the input/input services meant for dutiable final products, the provisions of Rule 6(3)(b) would be attracted and hence, the impugned orders upholding the dropping of the demands under Rule 6(3)(b) are not correct.
6. Ms. Surabhi Sinha, Advocate ld. Counsel representing M/s.Goyal Proteins Ltd. and Shri A.C. Jain, Advocate, ld. Counsel representing Sukhjit Starch & Chemicals Ltd. pleaded that in these cases, the exempted by-products viz. acid oil in course of manufacture of refined vegetable oil and Hydrol in the course of manufacture of Dextrose Monohydrate and Dextrose Anhydrous had emerged as unavoidable and inevitable by-products, that in these circumstances, it was impossible for the respondent to maintain separate accounts and inventory of the inputs meant for dutiable final products and exempted final products and as such, in these cases, provisions of Rule 6(2) read with Rule 6(3)(b) of Cenvat Credit Rules, 2004 would not apply, that in this regard, they rely upon Honble Bombay High Courts judgement in the case of Rallies India Ltd. Vs. Union of India reported in 2009 (233) ELT 301 (Bombay) and also the judgement of the Tribunal in the case of Narmada Gelatin reported in 2009 (233) ELT 332 (Tribunal). It was, therefore, pleaded that there is no infirmity in the impugned orders passed by the Commissioner (Appeals).
7. We have considered the submissions from both the sides and perused the records.
8. In these cases, while the main product being manufactured by the respondent i.e. refined vegetable oil being manufactured by M/s. Goyal Proteins and Dextrose Monohydrate and Dextrose Anhydrous being manufactured by M/s. Starch Chemicals were dutiable final products and the respondent have availed cenvat credit in respect of input/ input services used in the manufacture of these dutiable final products. In course of manufacture of these dutiable final products, some by-products exempt from duty also arose. Acid oil emerges in the manufacture of refined vegetable oil and during the manufacture of Dextrose Monohydrate and Dextrose Anhydrous, a by-product viz. Hydrol emerges. In these circumstances of the case, it was impossible for the Respondents to maintain separate account and inventory of the inputs/input services meant for dutiable final products and exempted final products as this can be done only if two different final products, one dutiable and the other exempted are being manufactured consciously. When compliance of a provision is impossible, an assessee cannot be penalized for his failure to comply with the same. Lex non cogit ad impossibilia is a well settled legal principle. It is for this reason only that the Honble Bombay High Court in the case of Rallies India Ltd. (supra) and the Tribunal in the case of Narmada Gelatin (supra) had held that the provisions of Rule 6(2) read with Rule 6(3)(b) of Cenvat Credit Rules, 2002/2004 would not be applicable in such cases when in course of manufacture of dutiable final products some exempted final products also emerge as inevitable by-product. In view of this, we do not find any infirmity in the impugned orders. The Revenues appeals are dismissed.
(Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) Ckp.
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