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2022 (1) TMI 157 - AT - Central ExciseReversal of CENVAT Credit - common inputs/ common input services used by the appellant in production of sponge iron and in production /generation of electricity as sold - dutiable as well as exempted goods - non-maintenance of separate records - HELD THAT:- Admittedly the electricity so generated by the appellant has being used captively as well as sold to other buyers and on such sales no duty was paid by the noticee because of the exemption for generation of electricity. The availment of CENVAT Credit on the inputs / input services used by the appellant definitely shall be governed by Rule 6 of CENVAT Credit Rules, 2004. Since the separate account was not maintained by the appellant under Rule 6(3) of CENVAT Credit Rules, 2004 will be applicable in terms whereof either 5% of the value of exempted goods and exempted service was to be paid or such an amount as is calculated in terms of Rule 6(3A)( c) (i) with respect to calculating amount of CENVAT Credit on imports used in or in relation to manufacture of exempted goods and Rule 6(3)(A)(C)(iii) for an amount attributable to input service used in or in relation to manufacture of exempted goods - only such common inputs were used, the value of such common inputs was to be used in said computation as were used for generation of such amount of electricity which was sold outside. Further a clarification in Chapter 5 of CBEC Board Circular No. 754/70/2003 CX dated 9.10.2003 says that CENVAT Credit is also admissible in respect of amount of inputs contained in waste/ refuse of by product. Similarly, the CENVAT Credit is not to be denied if the inputs are used in intermediate of the final product even if such intermediate is exempted from payment of duty. The basic idea is that CENVAT Credit is admissible so long as the input are used in or in relation to manufacture of final product whether directly or indirectly and such final products have been cleared. When the calculation arrived at by the Department and confirmed vide the order under challenge is perused (in para 18.3 of show cause notice), it is observed that the value of coal (inputs ) used in power plant and value of Coal handling service (input service) in terms of Rule 6(3A)(c ) (i) and 6 (3A(iii) has to be the value as shown in Column 4 of such table in para 18.3 of the show cause notice. However, the value of total inputs / input service as mentioned in para 1 of the said table has been taken by the Investigating Authority and has been confirmed by the Commissioner (Appeals). The calculation based upon total value of input / input service is held to be wrong - no penalty can be imposed under Section 11AC of Central Excise Act, 1944 in respect of alleged non payment of the amount due 6(3) CENVAT Credit Rules, 2004 - Appeal allowed - decided in favor of appellant.
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