TMI Blog2021 (8) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of exempted goods as well as final product, it is clear that the said goods should be arising out of the manufacturing activity even though after that the said goods may or may not be excisable goods - In the present case, the packaging material since not arising out of any manufacturing process the same will not fall either under Sub-clause (d) or sub-clause (h) of Rule 2 of Cenvat Credit Rules, 2004. As regard explanation (2), it is only for the purpose of value of the non-excisable goods to calculate the payable amount under Rule 6(3). Since the goods does not fall under the explanation (1), explanation (2) will obviously not be applicable therefore, the charges made in the Show Cause Notice are not tenable. An ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has relied upon the Explanation (1) and (2) of Rule 6(1). He submits that the said explanation applies to the goods which are manufactured even though it is non-excisable. However, as per the undisputed fact the packaging material of the input is not arising out of the manufacture of any final product. Therefore, entire basis of the Show Cause Notice is bad in law and the proceeding made on the basis of the said Show Cause Notice by the Adjudicating Authority as well as the Commissioner (Appeals) are not tenable. In support, he placed reliance on the following judgments:- UNION OF INDIA v/S. DSCL SUGAR LTD- 2015 (322) ELT 769 (SC) CCE v/S. WEST COAST INDUSTRIAL GASES LTD.- 2003 (155) ELT 11 (SC) GRASIM INDUSTRIES LTD v/S. UNION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Act and the rules made there under. On plain reading of the above explanation, I find that as per explanation (1) only goods which are defined under clause (d) and (h) of Rule 2 could be covered for the purpose of demand under Rule 6(3), for ease of reference clause (d) and (h) of Rule 2 are reproduced below:- (d) exempted goods means excisable goods which are exempt from the whole of the duty of excisable leviable thereon, and includes goods which are chargeable to Nil rate of duty [ and goods in respect of which the benefit of an exemption under Notification NO.1/2011-CE, dated 1-3-2011 or under entries at S. Nos. 67 and 128 of Noti. No. 12/2012-CE dt. 17-3-2012 is availed]; (h) final products means excisabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as inputs. Credit taken under Modvat is with reference to the duty on inputs and not on the containers, notwithstanding the fact that the value of the inputs may include the value of containers and the duty on the inputs may be on 2. ad valorem basis. It is, therefore, clarified that no duty would be payable when such empty containers are cleared from the factory. 5 . Thereafter, on the basis of the decision rendered by the CEGAT, a circular was issued on 23rd March, 1999, wherein it has also been observed as under :- The matter has been examined by the Board. In view of the above CEGAT judgment, it has been decided not to demand duty on waste packages/containers used for packaging modvatable inputs 2. when cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion that in absence of Bagasse being a manufactured final product, the obligation of reversal of Cenvat Credit under Rule (1) of the Cenvat Credit Rules, 2004 is not attracted, and the ratio laid down in the judgment of the Hon ble Supreme Court in the case of Union of India and others v M/s. DSCL Sugar Ltd and Others (supra) still holds the field. Rule 6 of the Cenvat Credit Rules would have no application for reversal of Cenvat Credit in relation to Bagasse. The Circular No. 1027/15/2016-CX, dated 25-4-2016, contained in Annexure-1 to the writ petition to the extent that it includes Bagasse under the purview of the reversal of credit of input services in terms of Rule 6 of the Cenvat Credit Rules, 2004, as well as th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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