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2015 (10) TMI 1559 - AT - Central ExciseDenial of CENVAT Credit - emergence of byproducts which is exempted from duty - Held that:- The arguments of revenue are largely based on the plain reading of the provisions of rule 6. The argument of the revenue is that a part of the inputs on which credit has been claimed are used in production of the byproduct namely blast furnace gases. It has therefore been argued that credit of such quantity of inputs as are used in the production of the byproduct need to be reversed, and if that has not been done in terms of sub-rule 3 of rule 6 of CCR a certain amount needs to be reversed. The reliance placed by the revenue on the decision of Hon’ble Apex Court in case of Commissioner of sales tax versus Bharat petroleum Corporation Limited [1992 (2) TMI 250 - SUPREME COURT OF INDIA], is misplaced as the issue in the said case was leviability of sales tax on byproduct sold. In the instant case the issue is substantially different from that. If in that process certain unintended byproducts emerge as a technical necessity then it cannot be said that part of the said inputs have been used in Manufacturer of the byproducts. In other words the credit of that quantity of raw materials shall be allowed which is required for manufacture of the intended quantity of final products, irrespective of the fact that certain byproducts emerge as technical necessity. To support this proposition the appellants have relied on the decision of the Apex Court in the case of Hindustan zinc Limited (2014 (5) TMI 253 - SUPREME COURT). It is seen that Hon’ble Apex Court has laid down the ratio that when a byproduct emerges as a technical necessity, it cannot be said that any inputs have been used for the Manufacturer of the byproduct. The ratio of this judgement clearly applies to the facts of the impugned case. Moreover on perusal of the clarification dated 3.4.2000, it is seen that CBEC Circular also agrees with the said ratio laid down by the Hon’ble Apex Court. - Decided in favour of assessee.
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