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M/s. Salasar Sponge & Power Ltd. Versus C.C.E., Raipur

2016 (10) TMI 651 - CESTAT NEW DELHI

Reversal of CENVAT credit on exempted as well as dutiable goods under rule 6 - Demand of CENVAT credit with interest and penalty u/R 6(3)(b) read with Rule 14 of Cenvat Credit Rules, 2004 - manufacture of sponge iron falling under heading 7203 of the Schedule to the Central Excise Tariff Act, 1985 - another product Iron Ore Fines produced on manufacture of iron ore is cleared without payment of duty as there is exemption from payment of excise duty - CENVAT credit availed on GTA services paid fo .....

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was held that by-products cannot be held to be main final products. The court was examining the question of reversal in the context of Rule 57CC as well as Rule 6 of the Cenvat Credit Rules, 2004 and decided that for clearance of exempted by-products there will be no need for reversal of 8%/10% of the value of the exempted products. - Generation of electricity in the captive power plant situated within the factory - A part of the electricity generated in the power plant was wheeled out to th .....

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e iron. If the credit originally availed is reversed subsequently it would amount to the effect as if no credit has been availed. - no justification found to demand 10% of the value of electricity wheeled out. - The appellant has availed Cenvat credit not only on GTA service but also on various other services such as cargo handling service, consulting engineering service, security service, telephone service, etc. It is easily seen that credit availed on service tax on transportation of coal .....

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n The present appeal has been filed against Order-in-Original dated 24.09.2008 passed by Commissioner of Central Excise & Customs, Raipur. The appellant is engaged in the manufacture of sponge iron falling under heading 7203 of the Schedule to the Central Excise Tariff Act, 1985. They were availing Cenvat credit on input and input services. They were also paying service tax on transportation of goods inputs as well as final products and were also availing Cenvat credit on such service tax. T .....

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because there is exemption from payment of excise duty. The appellant has availed Cenvat credit of service tax paid on GTA services paid for the transportation of iron ore to their factory. Since no separate accounts were maintained by them and the common input service (GTA) credit has been taken and used for dutiable final product (sponge iron) and exempted final product (iron ore fines), demand has been made for reversal of Cenvat credit at the rate of 10% of the value of the exempted products .....

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the Cenvat Credit Rules, 2004 at the rate of 10% of the value of the exempted goods (electricity wheeled out to Chhattisgarh Electricity Board). 2. The appellant challenged the impugned order mainly on the following grounds:- (i) Iron ore fines is not a final product, which is exempted, but is a by-product which has emerged during the course of manufacture of sponge iron. Unintended by-products cannot be treated as final product and hence will not fall in the category of exempted goods. Conseque .....

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isable goods as defined in Section 2(b) of the Central Excise Act, 1944 in-as-much-as no rate of duty has been prescribed for electrical energy. The electricity cannot be categorised as exempted goods also since there is no exemption Notification granting such exemption. They have finally argued that there is no liability to pay 10% of the value of electricity wheeled out under Rule 6(3) of Cenvat Credit Rules, 2004. 3. However, they submitted that they have reversed the entire credit taken on t .....

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ited the following decisions:- (i) Chandrapur Magnet Wires (P) Ltd. Vs. Collector of Central Excise, Nagpur [1996 (81) ELT 3 (SC) (ii) CCE Vs. Ashima Dyecot Ltd. [2008 (33) ELT 580 (Guj)] (iii) CCE Vs. Asian Fertilizers Ltd. [2015 (322) ELT 666 (All)]. 4. We have heard Shri KK Anand, ld. counsel for the appellant and Shri GR Singh, ld. Departmental Representative for Revenue. 5. The appellant has used iron ore as the main input in the manufacture of sponge iron and have taken credit of service t .....

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d (iron ore fines). For failure to maintain separate accounts, the appellant was held liable to pay 10% of the value of iron ore fines cleared in terms of Rule 6 (3) (b) of the Cenvat Credit Rules, 2004. Ld. counsel for the appellant cited the following case laws and has argued that there is no need for reversal of 10% in the case of waste or by-product:- (i) CCE Vs. Solaris Chemtech Ltd. [2007 (214) ELT 481 (SC). (ii) Ballarpur Industries Ltd. Ltd. Vs. CCE, Nagpur [2006 (205) ELT 483 (Tri.-Mum) .....

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-products there will be no need for reversal of 8%/10% of the value of the exempted products. This decision of the apex court is squarely applicable in the present case in the case of iron ore fines. This Tribunal has also taken similar view in the subsequent decision in the case of CCEST, Raipur Vs. Aarti Sponge & Power Ltd. (supra). We find that the issue is no more res integra in-as-much-as the issue stands decided in favour of the appellant by the apex court. 6. Now, we turn to the secon .....

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