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2021 (5) TMI 442 - AT - Central ExciseCENVAT Credit - Inputs or not - by-product - wash oil, sulphuric acid, caustic soda, alum, hydrochloric acid, ion exchanger - generation of ammonium sulphate and CO gas - cenvat credit on common inputs which were used in or in relation to, either directly or indirectly in the manufacture and clearance of dutiable final products as well as exempted final products - ammonium sulphate and CO gas - Rule 6(3)(ii) of the Cenvat Credit Rules. Whether wash oil, sulphuric acid, caustic soda, alum, hydrochloric acid, ion exchanger are inputs in or in relation to generation of ammonium sulphate and CO gas? - HELD THAT:- In the case of AARTI DRUGS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III [2001 (4) TMI 146 - CEGAT, MUMBAI] which was affirmed by the Hon’ble Bombay High Court in COMMISSIONER VERSUS AARTI DRUGS LTD. [2009 (2) TMI 800 - BOMBAY HIGH COURT] and further affirmed by the Hon’ble Supreme Court in COMMISSIONER VERSUS AARTI DRUGS LTD. [2015 (10) TMI 554 - SC ORDER], a Division Bench of the Tribunal has held that ammonium sulphate obtained from mother liquor is a by-product and the provisions of Rule 57CC(1) of the erstwhile Central Excise Rules, 1944, equivalent to Rules 6(2) and 6(3) of the Cenvat Credit Rules, 2004, is inapplicable and cenvat credit of inputs contained in such by-product was permissible. The facts and the issues contained the decisions of the Apex Court and the Tribunal are, on perusal of the impugned orders, the adjudication orders and the documents on record of the present proceedings are found to be the same and hence the said decisions are fully applicable to the instant cases - credit allowed. Whether demand in terms of Rule 6(3)(i) of the Cenvat Credit Rules is appropriate as the appellant availed cenvat credit on common inputs which were used in or in relation to, either directly or indirectly in the manufacture and clearance of dutiable final products as well as exempted final products, namely ammonium sulphate and CO gas, where the appellant had exercised option to follow Rule 6(3)(ii) of the Cenvat Credit Rules in terms of Rule 6(3A) and whether non-acceptance thereof by the Department was correct? - HELD THAT:- There is no dispute nor denial in either the show cause notices or in the adjudication orders that the appellant had exercised option in terms of Rule 6(3)(ii) of the Cenvat Credit Rules. Once this fact, established from the materials on record, is not disputed, there can be no demand in terms of Rule 6(3)(i) of the Cenvat Credit Rules - The finding that the appellant was required to pay much higher amount in terms of Rule 6(3) of the Cenvat Credit Rules other than that actual reversed is also without any merit. On plain reading of Rules 6(3) and (3A) it is seen that nowhere it is mentioned that an assessee should pay any amount higher than that of the actual amount calculated under the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules. The finding that the reversal of credit attributable to the inputs used in the manufacture of exempted products was insufficient in accordance to the demanded amount as calculated in the show cause notices is misconceived. The relevant provisions and procedure nowhere requires that an assessee should pay an amount higher than that of the actual amount calculated under the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules. Appeal allowed - decided in favor of appellant.
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