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JSW Steel Ltd. Versus Commissioner of Central Excise, Navi Mumbai

2015 (10) TMI 1559 - CESTAT MUMBAI

Denial of CENVAT Credit - emergence of byproducts which is exempted from duty - Held that:- The arguments 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 b .....

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ducts 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 technical necessity. To support this proposition the appellants have relied on the decision of the Apex Court in the case of Hindustan zinc Limite .....

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ssessee. - APPEAL No. E/85489/15 - Final Order No. A/3146/2015-WZB/EB - Dated:- 4-9-2015 - Mr.Anil Choudhary, Member (Judicial) And Mr. Raju, Member (Technical) For the Petitioner : Shri.Vishal Agarwal, Advocate For the Respondent : Shri.Ajay Kumar, Jt. Comm. (AR) ORDER Per: Raju 1. The appellants are manufacturers of steel products and use blast furnace for manufacture of steel. During the process of Manufacturer of steel due to reactions in the furnace certain gases are released. These gases u .....

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scribes 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 tha .....

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availing full exemption from Central Excise duty. The said demand notices were confirmed by the additional Commissioner vide order dated 30.9.2013. The appellants preferred appeal before Commissioner appeals who also upheld the demands vide his order dated to 6.11.2014. The appellants are in appeal before us against the said order of Commissioner (Appeals). 4. The appellants argued that the issue is settled in their favour by large number of judgements including those of the Apex Court. The pa .....

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red as a unintentional consequence of manufacture of dutiable final products, 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 .....

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epartment took a position that ethylene glycol was used in the production of methanol and proportionate credit taken on ethylene glycol was to be reversed. This Court ruled that the emergence of methanol was a technological necessity and no part of ethylene glycol could be said to have been used in production of methanol and indeed it was held that the total quantity of ethylene glycol was used for the production of polyester. The fact in all these three appeals appear to be identical to the fac .....

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fied that CENVAT credit shall be admissible in respect of the amount of inputs contained in any of the aforesaid waste, refuse or by-product. Similarly, CENVAT should not be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The 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 asser .....

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rsus Bharat petroleum Corporation Limited 1995 (77) ELT 790 (SC). In the said decision the Apex Court has held that sales tax is attracted subsidiary products also. 6. We considered the submissions of the appellants as well as the learned AR. The issue that needs were decided is if they mischief of rule 6 of CCR is attracted in case an exempted byproduct is sold by the appellants. According to the appellants these are not covered by the sub rule (1) of the rule 6 of CCR. They assert that all th .....

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ufacturing dutiable final products as well as exempted byproducts they are hit by the mischief of rule 6. Sub rule (1) of the rule 6 of CCR reads as under 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. - (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in sub-rule (2). 7. We have gone throu .....

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