TMI Blog2020 (1) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the Hon ble Apex Court has distinguished between the final products and the by-products - After examining in detail the manufacturing process in both these cases, the Hon ble Apex Court has clarified that rigor of Rule 6 is applicable only in the case of two final products being manufactured by the assessee and not in the case of one final product and another waste product or the by-product being produced. It was clarified that so long as Sulfuric Acid in the former case and lean gas in the later case are obtained as by-product and not as final product Rule 57 CC / Rule 6 C of Cenvat Credit Rules, 2004 will not be applicable. Precondition for applicability of Rule 6 (1) is that there should be manufacture of exempted goods which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cakes and are also taking cenvat credit of the duty paid on inputs used in manufacture of the above said final products. Department during the scrutiny of appellant s record observed that they have not included the amounts received as other income amounting to ₹ 7,20,000/- in the assessable value. Accordingly, a differential duty to the tune of ₹ 51,912/- was proposed to be recovered. In addition, Department observed that the appellants are not only manufacturing dutiable goods, but also the exempted goods. However, have not maintained the separate records in respect of inputs used in manufacture of the said dutiable and exempted goods. They have cleared 2051.255 MTs of spent acid (Sulfuric Acid), during the period from May, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Rule 6 of Cenvat Credit Rules, 2004 is, therefore, prayed to be set aside. Learned Counsel has relied upon the decision of Tribunal, Ahmedabad in the case of Nirma Ltd. vs. Commissioner of Central Excise, Ahmedabad reported in 2012 (276) ELT 283. 4. While rebutting these arguments, it is submitted on behalf of the respondent that Show cause notice is clear enough to hold that the appellant is not only manufacturing the detergents and soaps but is also manufacturing the Sulfuric Acid. Since the said Sulfuric Acid is being cleared to the fertilizer companies, the same becomes entitled for the exemption and as such, becomes the exempted goods. Hence, Rule 6 of Cenvat Credit Rules, 2004 has rightly been applied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 57 CC / Rule 6 C of Cenvat Credit Rules, 2004 will not be applicable. 6. I further observe that :- Precondition for applicability of Rule 6 (1) is that there should be manufacture of exempted goods which can be clearly inferred from a bare perusal of Rule 6 (1). The obligation for reversal of credit can arise only in case of manufacture of dutiable final product and manufacture of exempted products, and in case the exempted goods are not manufactured there is no substantive liability for reversal of credit. By amendment in Rule 6 non-excisable goods cleared for a consideration from the factory may have the effect of treating byproduct or waste to be an exempted good, but cannot result in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court also considered the definition of manufacture as provided in Section 2 (f) of the Act wherein there is a deeming provision amounting to manufacture in respect of certain goods, and specifically with regard to by product and held as under:- In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the section or in the chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of section 2 (f) of the act and the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was aggrieved with the earlier order of the Tribunal, it was open for them to file an appeal there against before higher appellate forum. The judicial discipline requires the lower authority to follow the declaration of law by higher appellate forum. Reference in this regard may be made to Hon ble Mumbai High Court s judgment in the case of CCE, Nasik v. M/s. Jain Vanguard Polybutlene Ltd. as reported in 2010 (256) E.L.T. 523 (Bom.) as also the Tribunal s decision in the case of M/s. Gujarat Composite Ltd. v. CCE, Ahmedabad as reported in 2006 (195) E.L.T. 310 (Tri. - Mum.). As such, it was not open to the Commissioner (Appeals) to take a different view when an identical issue was decided in same party s case by the earlier order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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