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2020 (1) TMI 100 - AT - Central ExciseCENVAT Credit - clearance of spent acid (Sulfuric Acid) during the period from May, 2010 to March, 2011 - common inputs used for taxable as well as exempt goods - non-maintenance of separate records - violation of Rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- The issue involved herein is no more res integra, as it stands decided by the Hon’ble Apex Court in the case of UNION OF INDIA & OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. [2014 (5) TMI 253 - SUPREME COURT] and also in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS GAS AUTHORITY OF INDIA LTD. [2007 (11) TMI 276 - SUPREME COURT], wherein the Hon’ble Apex Court has distinguished between the final products and the by-products - After examining in detail the manufacturing process in both these cases, the Hon’ble Apex Court has clarified that rigor of Rule 6 is applicable only in the case of two final products being manufactured by the assessee and not in the case of one final product and another waste product or the by-product being produced. It was clarified that so long as Sulfuric Acid in the former case and lean gas in the later case are obtained as by-product and not as final product Rule 57 CC / Rule 6 C of Cenvat Credit Rules, 2004 will not be applicable. Precondition for applicability of Rule 6 (1) is that there should be "manufacture of exempted goods" which can be clearly inferred from a bare perusal of Rule 6 (1). The obligation for reversal of credit can arise only in case of manufacture of dutiable final product and manufacture of exempted products, and in case the exempted goods are not manufactured there is no substantive liability for reversal of credit. Keeping in view the certificate of registration as produced by the appellant recording it to be registered manufacturer of detergent, soaps and cakes only, where spent Acid is a compulsive products as acid slurry, I am of the opinion that Department has failed to follow the judicial discipline - Despite the issue being clearly and properly adjudicated and clarified time and again with respect to the by-products/ waste products emerging during the process of manufacture of final product, the confirmation of demand in such cases still under Rule 6 of CCR is opined to be an act of judicial indiscipline on the part of adjudicating authorities. Appeal allowed - decided in favor of appellant.
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