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Appearance Shri Rajesh Ravindran, Advocate for appellant Shri V.K. Singh, SDR For Respondent CORAM:

Shri. M.V. Ravindran, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 17.02.11 Date of Decision : 17.02.11 ORDER NO.
Per : M.V. Ravindran These appeals are against the Order-in-Appeal No. SRK/28 to 32/RGD/2007 dated 19.07.2007.

2. Heard both sides and perused the records.

3. Relevant facts arisen for consideration are that the appellants had availed CENVAT credit of duty paid on Iron Ore Pellets procured by them. As a part of technical requirement of manufacturing process, such iron ore pellets are sieved and put to a process in the factory premises, wherein the pellets which are less than 6 mm are segregated. Such segregated iron ore pellets of less than 6 mm are treated as waste and cleared on payment of appropriate duty. The revenue authorities felt that the appellant should have reversed the amount of CENVAT credit taken on such iron ore pellets. After coming to such conclusion they issued a show-cause notice to the appellants. The Commissioner dropped the proceedings initiated by the show-cause notice. Aggrieved by the order, the Revenue preferred an appeal before the learned Commissioner (Appeals). The Commissioner (Appeals) has set aside the order-in-original by recording the following:-

In the instant case, the respondents are manually / mechanically segregating the Iron Ore Pellets / lumps below 6 mm size from the bigger pellets / lumps as the technology employed by them is such that only the pellets / lumps of size above 6mm have to be fed into the reactor. The only difference between the two types of inputs Iron Ore Pellets / lumps after the process of sieving is that the pellets / lumps of the size 6mm are suitable for use by the respondents and those of the size below 6 mm are not suitable for use by the respondents. Otherwise there is no difference whatsoever. The suitability of use by a particular manufacturer cannot be a criterion to decide whether the process of manufacture stipulated in the Act has taken place or not. The Iron ore pellets / lumps of size below 6mm are not the result of the manufacturing process but of physical segregation before the commencement of manufacturing process. Therefore, the credit taken on the said iron ore pellets / lumps was required to be reversed. Accordingly, impugned orders cannot be sustained and have to be set aside.