9911796707
TMI Blog2022 (11) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... original dated 31.01.2019 passed by the Joint Commissioner and rejected the appellant's appeal. 2. The appellant is engaged in the manufacture of fertilizers, namely urea and single super phosphate falling under Chapter 31 of the Schedule to the Central Excise Tariff Act, 1985. It was discharging central excise duty @ 1% on the urea as per Notification No. 12/2012-CE dated 17.03.2012. It is undisputed that this exemption notification was available subject to the condition that no Cenvat credit is taken on the inputs/input services. The process of manufacture of urea involves manufacture of ammonia in the first place. The ammonia is then converted into urea. The appellant also sells ammonia as such on which it pays the appropriate central e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The amount of ineligible common credit (D) is to be calculated as (D)= (E/F) x C where (E) is the value of the exempted goods removed and F is the value of the dutiable and exempted goods removes during the preceding financial year. 5. In other words, of the common credit (C) discussed above, the assessee will be ineligible to the proportion of value of exempted goods to the value of the total goods removed. 6. What is in dispute in this case is what value should be taken for the exempted goods removed. According to the assessee, the value of exempted goods removed is the value of urea which it had removed from the factory. The value of exempted goods plus non-exempted goods removed is the value of the urea plus the value of the ammo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for.................. 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 proport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal in terms of Rule 6(3A) has to be computed on the basis of the value of exempted final goods i.e., urea and not on the value of the exempted ammonia which is only an intermediate product in the manufacture of urea. He further submits that to apply the formula under Rule 6(3A) requires two products must be considered to determine the amount of eligible/ineligible common credit. Ammonia itself cannot be both dutiable product and exempted product. Lastly, he submits that penalty is not imposable and interest is also cannot recoverable. 10. Learned authorised representative for the Revenue supports the impugned order. He submits that the ammonia which was captively consumed in the manufacture of urea was also exempted by a notification beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad sold 50% of the ammonia as such, logically, the assessee should be eligible to only half the Cenvat credit viz. Rs. 500/-. The remaining Rs. 500/- which has gone into inputs/input services used in manufacture of ammonia which were ultimately cleared as urea should not be available to the assessee. However, while applying the formula under Rule 6(3A), the subsidized urea prices would result in the amount of ineligible Cenvat credit going down substantially to the extent sale 80%. Therefore, instead of Rs. 500/- being ineligible, the appellant will be ineligible to about Rs. 100/- as Cenvat credit as per the formula. The remaining Rs. 400/- which will logically be the credit on inputs/input services which have gone into the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate goods. The exempted good in this case is the urea. Its value is not in dispute. The 1% concessional rate of duty (without Cenvat credit) paid by the appellant is also on such value and not on the value without the subsidy. The value of urea does not change for calculation of Cenvat to be reversed under Rule 6(3A). Therefore, we find that the appellant has correctly reversed proportionate amount of Cenvat credit reckoning the value of the urea removed instead of reckoning the intermediate product ammonia which has gone into the manufacture of such urea. We also find that this issue has already been decided by this Tribunal in the case of Chambal Fertilizers and Chemicals Ltd. referred above. 15. In view of the above, the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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