TMI Blog2011 (10) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/106(Raj)/ Comm(A)/RP/Raj, dt.13.3.06 passed by CCE (A)Rajkot E/1461/2006 M/s Morvi Vegetable products Ltd. E/1550/2006 CCE Rajkot OIA No.153/2006/110(Raj)/ Commr(A)/RP/Raj, dt.17.3.06 passed by CCE (A) Rajkot E/1460/2006 M/s Morvi Vegetable products Ltd. As in all these 4 appeals, the issue involved is same and both the Revenue as also assessee are in appeal against same impugned order-in-appeals, the same are being disposed off by a common order. 2. The relevant facts that arise for consideration are that: The assessee's factory was visited by the officers on 23.07.04 and after examining the manufacturing process of refining of oil and hydrogenation, it revealed that the appellant took the CENVAT Credit of duty paid of Caustic Soda, Phosphoric Acid, Hydrogen gas, which are used in refining process. During the process of refining, free fatty acids which are exempted goods, are generated in addition to the refined oil and hydrogenised vanaspati. These free fatty acids are commercially known as Soap stock. It was noticed that such soap stock were further used in the manufacture of another finished product viz. Acid Oil, which was cleared wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vex Pvt.Ltd. Vs CCE Jaipur 2006-TIOL-825-CESTAT-DEL, has held that credit on these inputs consumed in the manufacture of by-product in question, does not arise. He would also draw our attention to the CENVAT Credit Rules, 2002 and also HSN of Chapter 15.22 to submit that the soap stock was by-product. It is also his submission that CBE C vide Circular No.11/92, dt.18.5.92 will apply in this case. 4. Ld.A.R., on the other hand, would submit that both the lower authorities were correct in applying Rule 6(2) of CENVAT Credit Rules as it is undisputed that acid oil which is cleared by availing exemption of benefit of notification is cleared out of processing of soap stock. He would also draw our attention to Rule 6(2) and submits that the rule lays emphasis on the manufacture of final product which is chargeable to duty, as well as exempted goods. He would specifically draw our attention to Rule 2(d) of CENVAT Credit Rules and submit that the exempted goods and excisable goods which are exempted and which includes goods which are chargeable to Nil rate of duty. He would also draw our attention to the definition of final product and excisable goods and submit that dutiable and exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h soap stock for manufacture of Acid Oil. The said acid oil is cleared by availing benefit of nil rate of duty under Notification No.115/75 as amended. 8. On the factual matrix, we find that the inevitable arising of soap stock in the manufacture of refined oil and hydrogenised vanaspati, is peculiar to Industry in the business in which the appellant-assessee is in. Such soap stock are known in the market as commercial product, but there is nothing on record to show that the appellant-assessee had cleared such soap stock in the market as a final product. As has already been recorded by us that the soap stock that arises during the course of manufacturing in the appellant-assessee's factory premises, is further processed, which yield acid oil which is cleared as final product by availing benefit of notification. At this stage, we find that co-ordinate Bench of the Tribunal in the case of CCE Hyderabad Vs Shree Siddhi Vinayaka Agro Extractions (P) Ltd. 2010-TIOL-183-CESTAT-BANG, in identical case had held that the soap stock which arises/emerges during refining of the edible oil is a Waste, though the Revenue in that case had called this product as by-product. In the case in han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the revenue that on the introduction of Rule 57CC, the petitioner was liable to maintain separate account so as to ascertain the quantity of HCL used in the manufacture of exempted phosphoryl 'A' and 'B', and since no such account was maintained the petitioner was liable to pay amount at 8% of the value of the phosphoryl 'A' and 'B' under Rule 57CC. 25. There is no merit in the above contention of the revenue. Under the Modvat Scheme, credit of duty paid on inputs can be availed only if such inputs are used in the manufacture of dutiable final product. Where a manufacturer uses common inputs to manufacture both dutiable final product as well as exempted final product, then such manufacturer is required to reverse the credit to the extent the input is used in the manufacture of the exempted final product. Where separate account was not maintained or could not be maintained so as to ascertain the quantity of inputs used in the manufacture of exempted final product, there used to be difficulty in reversing the credit of duty taken on inputs used in the manufacture of exempted final product. To obviate this difficulty Rule 57CC was introduced. As per Rule 57CC, where a manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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