TMI Blog2007 (4) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... citor General Shri Alok Sharma for appellant at length. 2. The appeal by the department challenges judgment and order dated 1-7-2006 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT for short) in Appeal Nos. E/3057 and 3062 of 2004 preferred by the department, as also judgment and order dated 15-7-2004 passed by Commissioner, Central Excise and Customs (Appeals) in Appeals also by the department which order of Commissioner (Appeals) was confirmed by CESTAT. 3. Four show cause notices were issued to respondent-assessee on 12-7-2002 and 24-4-2002 stating that they had contravened the provisions of Rule 6(2) of Cenvat Credit Rules and therefore, they were liable to pay differential duty of Rs. 22,15,089/- . It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) and CESTAT were dismissed by the respective authorities. 4. On reference to Order-in-Original by Deputy Commissioner he has taken note of the reversal of Cenvat credit by the assessee by procedure available under sub-rule (3)(b) of Rule 6 of Cenvat Credit Rules, 2001. He has observed: "Since the assessee has availed Modvat credit of common inputs viz, molasses used in manufacturing of denatured spirit (dutiable final product) as well as rectified spirit (exempted rectified product) the assessee is paying an amount of 8% of the value of second category viz, rectified spirit in case of captive consumption within their factory". After considering the text of Rule 57-AD(1) and Rule 57AD(b) of the Central Excise Rules, 1944 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate accounts/inventories of the inputs used in 2 different categories was maintained. The price of exempted category final product that is rectified spirit was known as the same was being sold besides used for captive consumption in the manufacture of non-excisable country made foreign liquor. Taking into consideration these admitted facts, the learned Commissioner was of the view that respondents had rightly paid the amount at 8% on the basis of the price of rectified spirit sold out from their unit, on the rectified spirit cleared for captive consumption too. The learned Commissioner has rejected the factual submission of the State to be incorrect that there was no sale of ethyl alcohol by the respondent from their unit which was necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erminal Clause of Rule 6(1), which reads "………. except in the circumstances mentioned in sub-rule 2." We are unable to agree with the learned Assistant, Solicitor General that Cenvat credit was not allowed on such quantity of inputs which is used in the manufacture of exempted goods, is the portion from Section 6(1) which can be used in isolated manner. In fact Rules 2 and 3 prescribed the method as to how the Cenvat Credit claimed can be reversed and explanation to sub-rule (3) further clarifies that it can be reversed either by debiting Cenvat credit or otherwise (which should include payment in cash). In the case at hands instead of debiting the Cenvat credit from the relevant register by book entry, the assessee has paid 8% duty at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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