Gujarat Raffia Industries Ltd. vs Cce on 21 November, 2003
4. We have considered the submissions of both the sides. Rule 6(1) of Cenvat Credit Rules, 2002 provides that the CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in Sub-rule (2). This is not the case of the Revenue that inputs in the present case that is hydrochloric acid is brought to manufacture Di-calcium Phosphate. The applicants are bringing Hydrochloric acid to manufacture gelatin and in the process of manufacture of gelatin, they get Spent Acid containing Mono Calcium Phosphate which is subsequently used by them to manufacture Di-calcium Phosphate by treating it with milk of lime. Prima facie, it cannot, therefore, be claimed that the inputs are used in the manufacture of final products which are chargeable to duty as well as any other final product which is exempted from the whole of duty of excise. This was the view expressed by the Tribunal in the case of Rama Industries Ltd. (supra). Further, the absence of Rule 57D will not make a by-product, a main product. Moreover, the Central Board of Excise & Customs has clarified vide Circular F. No. B-4/7/2000-TRU dated 3-4-2000 that CENVAT credit is admissible in respect of the amount of input contained in any of the waste, refuse or by-product. Accordingly, the applicants have made out a strong prima facie case in their favour. We stay the recovery of the entire duty demanded from them and penalty imposed on the applicants during the pendency of the appeal which posted for regular hearing on 14-2-2005.