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2021 (10) TMI 307 - AT - Central ExciseCENVAT Credit - exempted product/by-product - Silica Sand and Ball Clay - common input service is used for mining of Lignite as well as Silica Sand and Ball Clay (taxable as well as exempt goods) - applicability of Rule 6 of Cenvat Credit Rules, 2004 - HELD THAT:- The main contract is for mining of Lignite while doing the excavation to achieve Lignite, the over burden has to be removed and this over burden constitute Silica Sand and Ball Clay etc., thereafter the Lignite is excavated. With this it is clear that to excavate the Lignite unavoidably upper layer has to be removed and, in that process the said by-products are also removed. Therefore, from the nature of mining of Lignite as discussed above, it is clear that the Silica Sand and Ball Clay are generated unavoidably which is inevitable. Any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this logic demand under Rule 6 in respect of by-product is not applicable - Once it is established that the product in question are by-product then it is settled in respect of by-product demand under Rule 6 will not sustain. Accordingly, in the present case also, Silica Sand and Ball Clay being a by-product, no demand under Rule 6 shall sustain. Appeal allowed - decided in favor of appellant.
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