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2015 (10) TMI 1559

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..... ced by the revenue on the decision of Hon’ble Apex Court in case of Commissioner of sales tax versus Bharat petroleum Corporation Limited [1992 (2) TMI 250 - SUPREME COURT OF INDIA], is misplaced as the issue in the said case was leviability of sales tax on byproduct sold. In the instant case the issue is substantially different from that. If in that process certain unintended byproducts emerge as a technical necessity then it cannot be said that part of the said inputs have been used in Manufacturer of the byproducts. In other words the credit of that quantity of raw materials shall be allowed which is required for manufacture of the intended quantity of final products, irrespective of the fact that certain byproducts emerge as technica .....

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..... le 6 of the Cenvat Credit Rules,2004,(CCR) prescribes the obligations of Manufacturer of dutiable and exempted goods and provider of taxable and exempted services. It prescribes how a manufacturer of dutiable and exempted goods will take credit of input duties. This rule restricts the availability of credit under certain circumstances. 3. The appellants are manufacturing steel products which are excisable products. They are also clearing blast furnace gases to the neighbouring unit which are exempt from the Central Excise duty by virtue of Notification No.76/86 CE, dated 10.2.1986 and later by Notification No.17/2011-C.E., dated 1-3-2011. In view of the fact that the appellants are manufacturing excisable goods and also clearing blast fu .....

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..... ts, the quantity of inputs consumed for the manufacture of final products does not change as a result of the manufacture of the exempted byproducts. The particularly relied on the paragraph 25 of the said decision of the Apex Court, which reads as under 25. These arguments may seem to be attractive. However, having regard to the processes involved, which is already explained above and the reasons afforded by us, we express our inability to be persuaded by these submissions. We have already noticed above that in the case of Birla Copper (C.A. No. 2337 of 2011) the Tribunal has decided the matter following the judgment in the case of Swadeshi Limited (supra). In that case, Ethylene Glycol was reacted with DMT to produce polyester and etha .....

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..... basic idea is that CENVAT credit is admissible so long as the inputs are used in or in relation to the manufacture of final products, and whether directly or indirectly. 4.2 The appellant asserted that even the revenue recognises that no credit needs to be reversed then exempted byproducts, waste or refuse comes into existence. 5. Learned AR argued that the law laid down is very clear. The appellants are in fact manufacturing dutiable final products as well as exempted byproducts. There is no doubt in the language of rule 6 of CCR that in such a case mischief of the said rule is attracted. He also relied on the decision of the Apex Court in the case of the Commissioner of sales tax versus Bharat petroleum Corporation Limited 1995 (7 .....

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..... uments of revenue are largely based on the plain reading of the provisions of rule 6. The argument of the revenue is that a part of the inputs on which credit has been claimed are used in production of the byproduct namely blast furnace gases. It has therefore been argued that credit of such quantity of inputs as are used in the production of the byproduct need to be reversed, and if that has not been done in terms of sub-rule 3 of rule 6 of CCR a certain amount needs to be reversed. The reliance placed by the revenue on the decision of Hon ble Apex Court in case of Commissioner of sales tax versus Bharat petroleum Corporation Limited 1995 (77) ELT 790 (SC), is misplaced as the issue in the said case was leviability of sales tax on byproduc .....

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