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2015 (10) TMI 420 - AT - Central ExciseAvailment of CENVAT Credit - Non maintenance of separate account - Exemption under Notification No.4/06-CE dt.1.3.06 - Held that:- In terms of sub-rule (2) of Rule 6, Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or exempted services, then, the manufacturer or provider of output service shall maintain separate accounts and inventory for the receipt and consumption of inputs and input service used in or in relation to the manufacture of exempted goods/ exempted services and those used in or in relation to the manufacture of dutiable final products or providing exempted output service and take credit only on that quantity of inputs/input services which is intended for use in the manufacture of dutiable final product or providing output service on which no service tax is payable. - in course of manufacture of MS Ingots, slag dust arises as an inevitable by-product and in the present case, even if manufacturer, in accordance with the provisions of Rule 6 (2) wants to maintain separate account or inventory of inputs/input services used in the manufacture of dutiable products MS ingots and take credit only in respect of inputs and input services used in the manufacture of MS ingots, this is impossible as slag emergesd as an inevitable and unavoidable by-product. Separate account and inventory as per the provisions of Rule (2) can be maintained only when a manufacturer using common inputs/input services conciously manufactures final products one dutiable and other exempt the two separate processes. When it is impossible to comply with the provisions of sub-rule (2) of Rule 6, it would not be applicable. Sub-rule (3) of Rule 6 becomes applicable only when the manufacturer does not comply the provisions of sub-rule (2) and the provisions of sub-rule (3) would not be applicable in the cases where the sub-rule (2) is inapplicable. - same view has been taken by Hon'ble High Court of Gujarat in the case of CCE, Ahmadabad-III vs. Nirma., (2012 (10) TMI 138 - GUJARAT HIGH COURT) by Bombay High Court in the case of Rallis India Ltd.(2008 (12) TMI 46 - HIGH COURT of BOMBAY)the Apex court in the case of Hindustan Zinc Ltd.(2014 (5) TMI 253 - SUPREME COURT) The appellant thus have a strong prima facie case in their favour. The requirement of pre-deposit of the amount demanded under Rule 6(3) (i), interest thereon and penalty is, therefore waived, for hearing of the appeal and recovery thereof is stayed. - Stay granted.
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