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Hindustan Zinc Ltd, Pranabesh Roy Agm Process, Azad Shaw General Manager Finance Versus C.E. & S.T. Udaipur, C.C.E. & S.T. Jaipur

2018 (2) TMI 74 - CESTAT NEW DELHI

CENVAT credit - inputs/input services used in the manufacture of Silver - silver which is recovered during the course of the Pyro-metallurgical process by the appellant in which zinc concentrate, lead concentrate as well as bulk concentrate are charged - Department entertained a view that Silver is an exempted product, hence the Cenvat credit liable to be reversed - Rule 6 of the Credit Rules - Held that: - From the Imperial Smelting Furnace, Zinc bullion which floats at the top and the lead alo .....

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e entitled to the benefit granted by Rule 6(6) (vi) of the CCR, 2004 - appeal allowed - decided in favor of appellant. - Appeal No. E/52695, 52396, 52397/2015-EX ( DB ) - Final Order No. 50401-50403/2018 - Dated:- 1-2-2018 - Hon ble Justice Dr. Satish Chandra, President And Hon ble Mr. V. Padmanabhan, Member ( Technical ) Shri Amit Jain & Rahul Tangri, Advocate for the appellant Shri M. R. Sharma, DR for the respondent ORDER Per: V. Padmanabhan 1. The present set of appeals have been filed a .....

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Rules, 2002. Aggrieved by the impugned order the present appeals have been filed. 2. The appellant is engaged in the manufacture of Zinc, Lead, etc. at its Chanderia Lead Zinc Smelter Plant, in Distt. Chittorgarh. The Appellant is availing CENVAT credit on inputs, capital goods and input services, in terms of the provisions of the CENVAT Credit Rules, 2004 ( Credit Rules ), as in force during the relevant period. 3. The ore mined from the mines contains Zinc and Lead, along with several impurit .....

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bined mixture of zinc concentrate, lead concentrate and bulk concentrate. The three stages in this process are Sinter Plant, Imperial Smelting Furnace and Refineries. 4. The Pyro-metallurgical process starts with the feeding of zinc concentrate, lead concentrate and bulk concentrate, in specified proportion, in the Sinter Plant where Sulphur is removed from the concentrates to obtain zinc oxide and lead oxide and agglomerates the product into porous, high strength lumps, called sinter. The hot s .....

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n to the Lead Refinery to obtain Lead Ingots. During the process of refining, Silver emerges as a by-product which contains approx. 65-70%Lead, 10-15% Zinc, 5-7% Copper, 4-5% Silver and certain other impurities. This is further processed to recover Zinc and Lead, thus, leaving Silver (a by-product) during the elimination process. 6. During the relevant period, the Appellants cleared Silver from its factory, without payment of duty. The department entertained a view that Silver is an exempted pro .....

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s Shri M R Sharma, Ld. DR for the Revenue. 9. Shri Amit Jain summarized the arguments of the appellants i. The dispute pertains to the Silver which is recovered as a by-product in the course of Pyro-metallurgical process which is used by the appellant in his factory to manufacture zinc and led. The silver emerges as a by-product and is cleared without payment of duty. Revenue has taken the view that it is an exempted final product incurring mischief of Rule 6 of the Cenvat Credit Rules, 2004. Ac .....

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ed on case of CCE, Udaipur V/s Hindustan Zinc Ltd. 2017 TIOL 2552 CESTAT Delhi. iii. The Adjudicating Authority has also held that the appellant is not entitled to the benefit granted under Rule 6(6)(vi) wherein it has been specified that there will be no need to reverse the credit attributable to inputs and input services in case common inputs/ input services are used in the manufacture of gold or silver falling within Chapter 71 of the First Schedule, arising in the course of manufacture of co .....

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the impugned order. He submitted that the total value of silver recovered is much more than the value of lead/Zinc manufactured by the appellant. The silver emerging is covered under Tariff heading 7106 and is an exempted product. Such silver is to be considered as a manufacture product along with zinc and lead and consequently the mischief of Rule 6 of the Cenvat Credit Rules, 2004 will be incurred and the appellant will be liable to reverse the Cenvat Credit attributable to inputs/input servic .....

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fter 2005 the appellant has installed large scale commercial production of silver and hence the same cannot be considered as a by-product but a main product. 11. We have heard both sides and perused the record of the case. The dispute pertains to silver which is recovered during the course of the Pyro-metallurgical process by the appellant in which zinc concentrate, lead concentrate as well as bulk concentrate are charged. From the Imperial Smelting Furnace, Zinc bullion which floats at the top .....

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her put to process for recovery of base metal and silver, emerges as a by-product during the course of manufacture and refining of zinc and lead. In other words, all the inputs have been put to intended use and it is not the case that some portion of input is not put into use in the manufacture of zinc and lead. This position has been admitted by the Revenue also. If such is the case there can be no input which is solely attributable to the manufacture of small quantity of by-product namely, sil .....

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(178) E.L.T. 255 (Tri. - Del.). Reference can also be made to the decision of Hon ble Supreme Court in respondent s own case reported in 2014 9 EX/59850 of 2013 (303) E.L.T. 321 (S.C.). The Hon ble Supreme Court observed as below :- 26. Furthermore, the provisions of Rule 57CC cannot be read in isolation. In order to understand the scheme of Modvat credit contained in this Rule, a combined reading of Rules 57A, 57B and 57D along with Rule 57CC becomes inevitable. We have already reproduced Rule .....

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still said that Rule 57CC will apply. The appellant seeks to apply Rule 57CC when Rule 57D does not talk about application of Rule 57CC to final product and by-product when the byproduct emerged as a technological necessity. Accepting the argument of the appellant would amount to equating by-product and final product thereby obliterating the difference though recognised by the legislation itself. Significantly this interpretation by the Tribunal in Sterlite (supra) was not appealed against by t .....

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roduct value should form basis of such proportion. As already noted, we find no legal basis for such contention by the Revenue. 13. Observation of the Tribunal as above is very much applicable to the subsequent period also. The Ld. DR has attempted to differentiate the above case as pertaining to the period prior to the installation of the present smelting furnace but we are of the view that the ratio of the Tribunal is equally applicable for the subsequent period since the same is based on the .....

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