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TMI Blog2015 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, but the inputs namely Diethyl Carbanyl Chloride were used exclusively in the manufacture of exempted final product. A show cause notice dated 04.10.2006 was issued proposing to deny credit of Rs. 29,26,632/- alongwith interest and penalty on the inputs Diethyl Carbanyl Chloride used exclusively for the manufacture of finished goods i.e. Diethyl Carbamazine Citrate (DECC), during the period from September 2001 to August 2004, as per the provisions of Rule 6 of the Cenvat Credit Rules 2001, 2002/2004. The Adjudicating authority confirmed the demand of Rs. 29,26,632/- alongwith interest and appropriated an amount of Rs. 8 Lakh, as deposited during the investigation. He has also imposed penalty of equal amount of duty. By the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s categorically observed that Explanation III in Rule 6 (3) of the Cenvat Credit Rules, 2004 would be applicable prospectively and the present case is prior to the insertion of Explanation III. He further submits that the Tribunal has taken a consistent view that the compliance with the Rule 6 (3) relates to the entirety of inputs used in the exempted final products including common inputs used in the manufacture of dutiable and exempted final product. He relied upon the following decisions:- (a) Aurobindo Pharma Limited vs. CCE, Hyderabad 2007 (215) ELT 81 (Tri. Bang.). (b) Hetero Labs Limited vs. CCE, Hyderabad 2005 (192) ELT 716 (Tri. Bang.) (c) Bonfigilioli Transmissions Pvt. Limited vs. CCE, Chennai 2008 (223) ELT 470 (Tri. Chennai) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of duty paid on inputs that go into production of goods or services that suffer duty so that there is no cascading effect of goods or services having to suffer double taxation. A position that informed the legislative policy all along is reiterated by expressly denying credit where the final products or services are not subject to tax. We note that the Explanation has been issued for the removal of doubts. The Explanation is in the nature of a clarification and so applies retrospectively. Exceptions to the Rule 3 are specified in sub-rule (6) of Rule 6 of CCR. Therefore an assessee which uses inputs exclusively for the manufacture of exempted goods and services but makes clearances in any manner specified in sub-rule (6) of Rule 6 shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-III of Rule 6 (3) of the Rules, would be applicable retrospectively, therefore, there is no need to discuss the said case laws. 7. However, I find force in the submission of the learned Advocate insofar as the Commissioner (Appeals) has set-aside the adjudication order on merits and therefore, the alternative submissions of Revenue neutrality and limitation were not considered. In my considered view, the impugned order is not sustainable on merits. But, the respondent should be given an opportunity to place their submissions on limitation and Revenue neutrality before the Commissioner (Appeals). 8. In view of the above discussion, the impugned order is set-aside and the matter is remanded to Commissioner (Appeals) to decide as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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