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2016 (6) TMI 870 - CESTAT NEW DELHI

2016 (6) TMI 870 - CESTAT NEW DELHI - 2016 (343) E.L.T. 815 (Tri. - Del.) - Cenvat Credit - common inputs - Scope of Rule 6(3) - Exempted goods versus non-excisable goods - Levy of penalty - manufacture of dutiable final products as also in the manufacture of H B wires which emerged as a result of drawing of wire and galvanized wire, which has been held to be non-manufacturing activity - Appellant were paying 8% of the value of the same in terms of provisions of Rule 6(3)(b) of Cenvat Credit Rul .....

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not arise. As such, goods cannot held to be exempted goods, thus making the applicability of Rule 6(3)(b) as nil. - Rule 3 of Central Credit Rules allows a manufacturer or producer of final product, to avail the credit of duty paid on the inputs, which are to be used by them in the manufacture of final product. If there is no manufacturing activity involved, the said Rule debars the availment of credit at the ab initio stage itself. Inasmuch as no manufacturing activity was involved in the p .....

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Order No . 52075 /2016 - Dated:- 8-6-2016 - MS ARCHANA WADHWA, MEMBER (JUDICIAL) AND MR. V PADMANABHAN, MEMBER (TECHNICAL) For the Petitioner : Shri Abhas Mishra, Advocate For the Respondent : Shri Sanjay Jain, AR ORDER PER ARCHANA WADHWA: The appellant is engaged in the manufacture of HB wire, G I wire, G I Barbed wire, G I earthling coils, SS drop wire etc. falling under chapter 72 and 85 of the first Schedule to the Central Excise Tariff Act. The appellants were registered with the Central Ex .....

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parately for different types of inputs. 3. With effect from 1999-2002, the appellants started availing cenvat credit on the entire common inputs used in the manufacture of dutiable products as also the products which did not attract duty. Such non-dutiable products were being cleared by them on payment of 8% of the value of the same in terms of provisions of Rule 6(3)(b) of Cenvat Credit Rules. 4. Revenue, by entertaining a view that inasmuch as the appellants final product i.e. galvanized wire .....

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akh. Hence, the present appeal. 5. After hearing both the sides, we find that the issue required to be decided in the present appeal is as to whether the appellant is entitled to avail the cenvat credit of duty paid on common inputs used by them in the manufacture of dutiable final products as also in the manufacture of H B wires which emerged as a result of drawing of wire and galvanized wire, which has been held to be non-manufacturing activity by the Honble Supreme Court. It is well settled .....

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uch a scenario, the appellant can avail the cenvat credit of duty on the inputs used in the manufacture of such products and can clear such products on payment of 8% of value of said products in terms of provisions of Rule 6(3)(b). It cannot be out of place to mention here that the said goods stand mentioned in the Central Excise Tariff attracting 16% duty on ad valoram basis. The appellants contention is that though the process adopted by them has been held to be non-manufacture, the fact that .....

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d goods are admittedly specified in the tariff and in terms of provisions of Rule 2(d), the same have to be held as excisable goods. The same attract duty at the rate of 16% ad valoram and as admitted by the learned advocate for the appellant, there is no exemption notification in respect of said goods. The provisions of Rule 6(3)(b) get attracted only when common cenvatable inputs stand used by the assessee for the manufacture of dutiable as also exempted goods. Going through the said Rule lead .....

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here was no manufacturing activity involved and thus reason that he is not paying full rate of duty of 16% on the said goods at the time of clearance of the same and on the other, he is claiming the applicability of Rule 6(3)(b) on the ground that said goods are dutiable but exempted. Such an interpretation if adopted would lead to total chaos. Even at the cost of repetition, it may be observed that appellant has not cleared their final product on full payment of duty of 16% in which case credit .....

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om the above, exempted goods are excisable goods, which stand exempted from payment of duty of excise leviable thereon. If no duty of excise is leviable on account of non-manufacture, the question of exemption of same does not arise. As such, goods cannot held to be exempted goods, thus making the applicability of Rule 6(3)(b) as nil. 10. The problem can also be tackled from other angle. Rule 3 of Central Credit Rules allows a manufacturer or producer of final product, to avail the credit of dut .....

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