TMI Blog2020 (11) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... retch the law in disregard to express provisions of the Act and the Cenvat Credit Rules. Rule 6(3)(i) provides for payment of an amount equal to 6% of value of the exempted goods and 7% of value of the exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts - It is further provided under Rule 6(3A) (b) to apply the standard formula for calculating the amount to be reversed or the ineligible Cenvat Credit. Rule 6 is attracted only in case, where an assessee manufacturers two output goods or is rendering two output services, where one is exempt and the other dutiable. Further, Statute is very clear, under the Rule 6(3)(ii) read with Rule 6(3A), which clearly provides for eligibility of input services in or in relation to the manufacture of exempted goods, and its clearance upto the place of removal shall be calculated proportionately - it is evident from the plain reading of the Rule that it speaks about the goods manufactured and removed during the financial year, and the intermediate products emerges during the manufacture of exempted final products. Extended period of Limitation - HELD THAT:- The issue being wholly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of ratio of value of its dutiable goods i.e. Ammonia to the value of the exempt goods (both dutiable and exempted goods i.e. Ammonia and SSP). Thus, the following formula is applied to compute proportionate credit as per Rule 6 (3A)(b)(iii):- Credit (X) = Assessable value of dutiable goods(Ammonia cleared on payment of duty) _____________________________________________________________ the assessable value of dutiable goods (Ammonia) + Exempted Goods (Urea/SSP) 5. Such computation for determining the proportionate credit is disputed by the Department vide show cause notice dated 11.01.2018, whereby demand of ₹ 47,59,264/- was proposed on the ground that the appellant has availed excess credit by including the value of the urea/SSP, while computing the proportionate credit. 6. It was, inter alia, alleged that the appellant is manufacturing Ammonia, which is an intermediate product used for the manufacture of urea and a very small quantity of the same was being cleared outside on payment of duty. The appellant submitted that they were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and not by taking the value of the Urea, which has been manufactured subsequently, for which no credit is admissible. However, while confirming the charge against the appellant, out of the total demand of ₹ 47,59,264/- proposed in the show cause notice, the Dy. Commissioner dropped a demand of ₹ 16,01,922/- for incorrect computation and confirmed the remainder demand of ₹ 31,57,272/- along with equal amount of penalty under Rule 15 (1) of Cenvat Credit Rules with interest. 13. Similarly, the second show cause notice was adjudicated by the Order-in-Original dated 25.07.2018 passed by the Dy. Commissioner confirming the demand of ₹ 33,76,576/- and further penalty of ₹ 3,37,000/- was imposed. 14. Aggrieved by the Orders-in-Original, the appellant preferred appeals before the ld. Commissioner (Appeals), both on merits and on limitation. 15. The ld. Commissioner (Appeals) was pleased to dismiss both the appeals by common order-in-appeal dated 24.06.2019 and upheld the confirmed demand as well as invocation of extended period of limitation. 16. Being aggrieved, the appellant is before this Tribunal. 17. Ld. Counsel for the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. Rule 6(3) provides, option to the manufacturer not to opt for maintenance of separate records, or is unable to maintain such records, wherein one of the options is to avail only such credit as is proportionately attributable to the manufacture of the Ammonia - dutiable goods under Rule 6(3A). It is further urged that the appellants main activity is clearance of the final product being fertilizer viz. Urea/SSP. Ammonia is an intermediate product, which is a quintessential product for the manufacture of Urea. 19. Evidently, when the appellant clears part of Ammonia being Surplus, on payment of duty, admittedly, the final product being cleared is Ammonia. Therefore, Ammonia becomes the dutiable goods manufactured by the appellant. Majority of the Ammonia so produced, however, is used as an intermediate product and consumed for the manufacture of Urea. Thus, the final product of the appellant is Urea and SSP (exempt). Thus, the captively consumed Ammonia cannot be treated as exempted final product by any stretch of imagination. The final product of the appellant is Ammonia, Urea and SSP, value of which has been taken for computation under Rule 6 (3A). 20. Ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee placing reliance on the Larger Bench decision of the Tribunal in the case of Texmo Industries - 2007 (208) ELT 338 contended that even in that case they have not maintained separate accounts and the decision of the Larger Bench of Delhi Tribunal is squarely applied in this case. The High Court further observed that a perusal of the facts shows that it was in respect of the exemption notification and the application of Rule 57 A of the Central Excise Rules. Accordingly, the High Court allowed the appeal of the Revenue by answering the questions of law in favour of the Revenue and against the assessee. Thus, the issue of value of the goods for the purpose of Rule 6(3A) is the value of the exempted goods cleared from the factory and not the value of the intermediate goods used for the manufacture of the exempted final products. 23. Ld. Counsel further urges that Rule 6(3) has been attracted in the precedent decisions, on the two final products, one of which is exempted and the other is dutiable. On this proposition, the ld. Counsel relies on the ruling of the Madras High Court in the case of Commissioner of Central Excise, Thirunelveli Vs. DCW Ltd. 2011 (274) ELT 183 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. It is further provided under Rule 6(3A) (b) to apply the standard formula for calculating the amount to be reversed or the ineligible Cenvat Credit. 32. I find that the Rule 6 is attracted only in case, where an assessee manufacturers two output goods or is rendering two output services, where one is exempt and the other dutiable. Further, Statute is very clear, under the Rule 6(3)(ii) read with Rule 6(3A), which clearly provides for eligibility of input services in or in relation to the manufacture of exempted goods, and its clearance upto the place of removal shall be calculated proportionately E/F x G, where E denotes the value of the exempted services provided plus the total value of the exempted goods manufactured and removed during the preceding financial year. (F) denotes the total value of taxable and exempted services provided and total value of the dutiable and exempted goods manufactured and removed during the precedent financial year and (G) denotes the total cenvat credit taken on input services during the month. 33. Thus, it is evident from the plain reading of the Rule that it speaks about the goods manufactured and removed during the financia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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