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2016 (6) TMI 870 - AT - Central ExciseCenvat Credit - common inputs - Scope of Rule 6(3) - Exempted goods versus non-excisable goods - Levy of penalty - manufacture of dutiable final products as also in the manufacture of H B wires which emerged as a result of drawing of wire and galvanized wire, which has been held to be non-manufacturing activity - Appellant were paying 8% of the value of the same in terms of provisions of Rule 6(3)(b) of Cenvat Credit Rules. - Revenue entertained a view that inasmuch as the appellants' final product i.e. galvanized wire and the other wires which emerges by the process of wire drawing are not excisable goods, the provisions of Rule 6(3) (b) of Cenvat Credit Rules is not applicable to them. Held that:- Exempted goods are excisable goods, which stand exempted from payment of duty of excise leviable thereon. If no duty of excise is leviable on account of non-manufacture, the question of exemption of same does not arise. As such, goods cannot held to be exempted goods, thus making the applicability of Rule 6(3)(b) as nil. Rule 3 of Central Credit Rules allows a manufacturer or producer of final product, to avail the credit of duty paid on the inputs, which are to be used by them in the manufacture of final product. If there is no manufacturing activity involved, the said Rule debars the availment of credit at the ab initio stage itself. Inasmuch as no manufacturing activity was involved in the present case as neither the wire drawing process nor the galvanization process involved any manufacturing activity, the credit itself was not available to the appellants under the said Rules so as to be further neutralized in terms of Rule 6(3)(b) of the Rules. Appellant is following said procedure after duly intimating the Revenue and seeking their permission, there is no scope for imposition of penalty upon them. - Decided partly in favor of assessee.
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