TMI Blog2015 (12) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India [ALLAHABAD HIGH COURT] has held that if the Cenvat credit initially taken is reversed subsequently it would amount to not taking Cenvat credit and same view has been taken by the Tribunal in the case of JCT Ltd. vs. CCE, Jallandhar [2015 (2) TMI 600 - CESTAT NEW DELHI]. Therefore if the appellant have fully reversed the credit in respect of common services or in other words not taken any Cenvat credit in respect of the common services there would be no justification for invoking Rule 6 (2) readwith Rule 6 (3) and the duty demand would not be sustainable at all. Without going into the question as to whether the steam and electricity are excisable goods or non-excisable goods, we set aside the impugned order and remand the matter to Commissioner for denovo adjudication. In denovo proceedings, the Commissioner should examine the appellant's plea that the input services are of three types as described above. In respect of the services which are exclusively used for manufacture of Carbon Black and the services covered by Rule 6 (5) in respect of which Cenvat credit has been taken upto 31/3/11 the provisions of Rule 6 (2) readwith Rule 6 (3) would not apply. If in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of 5%/10% of the sale value would be payable under Rule 6 (3) of the Cenvat Credit Rules, 2004. It is on this basis that a show cause notice dated 01/7/11 was issued for demand of ₹ 4,79,59,088/- for the period from 6th June, 2006 to March 2011 under Rule 6 (3) of the Cenvat Credit Rules, 2004 alongwith interest on it under Section 11AB and imposition of penalty on the appellant under Rule 15 (2) of Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act. This show cause notice was issued by invoking extended limitation period under proviso to Section 11A (1). Subsequently two more show cause notices dated 27/4/02 and 26/4/13 were issued for the period from April 2011 to March 2013 for demand of total amount of ₹ 2,00,31,455/- from the appellant under Rule 6 (3) of the Cenvat Credit Rules aiongwith interest on it under Section 11AB and imposition of penalty on them under Rule 15 (2) of the Cenvat Credit Rules, 2004 readwith Section 11AC of the Central Excise Act. 1.2 The above show cause notices were adjudicated by the Commissioner by two separate orders. One order adjudicating the show cause notice dated 01/7/11 and the second order adjudicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manufacturer an additional option to reverse the proportionate Cenvat credit in respect of inputs or input services used in or in relation to manufacture of exempted final products which is to be determined in accordance with the provisions of sub-Rule (3A) of Rule 6, that in any case, after the adjudication, the appellant have reversed the entire amount of Cenvat credit in respect of third category of services - Telecom Service, IT Service, Audit, Courier Service, Manpower supply service etc. and, hence, there is absolutely no justification for invoking Rule 6 (3), that in any case Rule 6 (3) is applicable when a manufacturer manufactures dutiable goods and exempted excisable goods by using common Cenvat credit availed inputs/input services, that exempted goods as per the definition of this term given in Rule 2 (d) of the Cenvat Credit Rules are the 'excisable goods' fully exempt from duty or having nil rate of duty, and the goods which are not excisable would not be covered by the definition of'exempted goods', that in the present case, neither electricity nor steam is excisable, that though electricity is covered by heading 27160000 there is no rate of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the sides and perused the records. 6. The appellant in their factory manufacture Carbon Black, the main raw material for which is CBFS. Beside this, they have also have a power plant in the factory. The power generated by this power plant is mainly used for the manufacture of Carbon Black and the remaining power is sold outside. The period of dispute in this case is from June 2006 to March 2013. The appellant beside CBFS also purchase furnace oil to be used in the boiler of the power plant for generating steam apart of which is sold out and the remaining quantity is used for generation of electricity.- There is no dispute that no Cenvat credit has been taken in the case of furnace oil. There is also no dispute that other than the CBFS, no Cenvat credit has been taken on any other input. The appellant have taken Cenvat credit in respect of certain services. In course of manufacture of Carbon Black from CBFS, an un-avoidabie waste in form of off gases emerges which contain carbon monoxide. Because of the hazardous nature of the carbon monoxide, the off gases cannot be release into the atmosphere as such. During the period prior to 22/08/08, the off gases were being flared. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by Rule 6 (5) and the other services. In respect of first two category of services, the provisions of Rule 6 (2) readwith Rule 6 (3) would not apply. As regards the third category of services - Telecom Services, IT Services/ Audit, Courier Service, Manpower Supply Services etc. which would be for the entire plant, the appellant's plea is that after the adjudication of the matter, they have reversed the entire Cenvat credit taken in respect of these services alongwith interest and have furnished evidence in this regard in form of Chartered Accountant's certificate. W.e.f. 01/3/08, the provisions of Rule 6 (3) had been amended to give an additional option to a manufacturer manufacturing dutiable final product and exempted final product by using common Cenvat credit availed input/input services and this additional option was to pay the proportionate credit in respect of input/input services used in or in relation to manufacture of and exempted final product or provision of exempted services and this proportionate credit was to be determined by the formula prescribed under sub-Rule (3A) of Rule 6. By Finance Act, 2010, the above amendment to Rule 6 (3) was given retrosp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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