TMI Blog2015 (9) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... had two units, one is for the manufacture of sugar and molasses and the other for distilling of denatured spirit, which is dutiable product and rectified spirit, which is non-dutiable product.The assessee had applied for grant of single licence for both the units as the distilling unit was using molasses manufactured by sugar unit, as inputs, for the manufacture of dutiable and non-dutiable products i.e. denatured spirit and rectified spirit respectively and also because of the reason both these units were located in the same premises.This request of the assessee was allowed and the assessee was granted the single licence. In the present case, we are concerned with the CENVAT Credit which was earned by the assessee in terms of CENVAT Credit Rules, 2001 which were in existence. These Rules were superseded by new Rules, namely, CENVAT Credit Rules, 2002 (hereinafter referred to as the Rules, 2002 ). It would be relevant to point out here that under the CENVAT Credit Rules, 2001, the assessee was also paying duty @ 8% of the value of the exempted goods cleared by it in lieu of the CENVAT Credit availed by it on the inputs utilized in the manufacture of its goods. The duty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001], No.56/2002-Central Excise dated the 14th November, 2002, [G.S.R. 764 (E) dated the 14th November, 2002], No.57/2002-Central Excise, dated the 14th November, 2002 [G.S.R.765 (E), dated the 14th November, 2002] and No.56/2003-Central Excise, dated the 25th june, 2003 [G.S.R. 513(E), dated the 25th june, 2003] shall respectively be utilized only for payment of duty on final products, in respect of which exemption under the said notifications No.39/2001-Central Excise dated the 31st July, 2001, 56/2002-Central Excise dated 14th November, 2002 and No.57/2002-Central Excise dated 14th November, 2002, and No.56/2003-Central Excise dated the 25th June, 2003 is availed. Rule 6. Obligation of manufacturer of dutiable and exempted goods.- (1) The CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). Provided the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12B of the Central Excise Rules, 2002 on the ground that the said inputs are used in the manufacture of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the factory; or (b) if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to eight per cent. of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory. Explanation I.- The amount mentioned in conditions (a) and (b) shall be paid by the manufacturer by debiting the CENVAT credit or otherwise. Explanation II.- If the manufacturer fails to pay the said amount, it shall be recovered along with interest in the same manner, as provided in rule 12, for recovery of CENVAT credit wrongly taken. (4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year. (5) The provisions of sub- rule (1), sub-rule (2), sub-rule (3) and sub-rule (4) shall not be applicable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, for this purpose, for utilization of the said credit, Rules,2002 are to be followed. On that basis, it is argued that Rule 6 would become applicable and it does not allow CENVAT Credit on such quantity of inputs which is used in the manufacture of exempted goods, coupled with the circumstances mentioned in sub-Rule 2 and, insofar as sub-Rule 2 is concerned, the case of the assessee is not covered there. This very contention was raised before the Tribunal also and the Tribunal has repelled the same in the following manner: Rule 9 of the CENVAT Credit Rules, 2002 clearly enacts that any amount of credit earned by the manufacturer under the CENVAT Credit Rules, 2001, as they existed prior to 1st day of March, 2002, and remaining unutilized credit on the day, shall be allowable as CENVAT Credit to such manufacturer under these rules and be allowed to be utilized in accordance with these Rules.The perusal of this rule leaves no doubt that it allows the utilization of the already earned credit by a manufacturer under the earlier CENVAT Credit Rules, 2001.Then, Rule 3(3) of the Rules, 2002 permits the utilization of the already earned MODVAT credit for payment of any duty of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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