TMI Blog2018 (5) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... denied. This provision is with the clear logic that the credit is available on the inputs so long as it is used in the manufacture of final product which is cleared on payment of duty. In the present case, all the inputs are used for manufacture of final product viz. wool tops which is cleared on payment of duty. However, the by - products are emerged unavoidably. Hence in the light of the above provisions, canvat credit cannot be denied on the input contained in the by - products. The provisions of Rule 57CC of the Central Excise Rules, 1944, Rule 6(2)/6(3)(b) of the Cenvat Credit Rules, 2002/2004 have no application in the facts of this case. Demand set aside - appeal allowed - decided in favor of appellant. - E/160/2010 - - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed the cenvat credit on the common inputs used in the manufacture of these goods cleared at nil rate of duty as well as the goods cleared on payment of duty. Therefore, in terms of the provisions of Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004, the appellant is required to pay an amount equal to 8% or 10% of the total price of exempted final product. Accordingly, a demand of ₹ 53,78,509/ - which is equal to 8% of the value of the exempted goods, was confirmed under the proviso to Section 11A (1) of the Central Excise Act read with Rule 14 of the Cenvat Credit Rules, 2002/2004. An equal amount of penalty was also imposed under Section 11AC and demand of interest under Section 11AB was also confirmed. Being aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacture of final product i.e. wool tops. Therefore, all these products are by - products. In this regard, we would like to go through the relevant Rule 57D of the Central Excise Rules, 1944 and Central Excise Instruction Manual which are reproduced below: - Rule 57D - Credit of duty not to be denied or varied in certain circumstances. - (1) Credit of specified duty shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse or by - product arising during the manufacture of the final product, or that the inputs have become waste during the course of manufacture of the final product, whether or not such waste or refuse or by - product is exempt from the who le of the duty of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 2002/2004 have no application in the facts of this case. This very issue has been considered in Hindustan Zinc Ltd. (supra) by the Hon ble Supreme Court wherein the Hon ble Supreme Court observed as under: - 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 57D above. It can be easily discerned from a combined reading of the aforesaid provisions that the terms used are inputs , final products , by - product , waste products , etc. We are of the opinion that these terms have been used taking into account commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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