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TMI Blog2022 (12) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Commissioner (Appeals) by which the orders passed by the Adjudicating Authority confirming the demand raised in the show cause notices have been upheld. 2. The issue involved in two appeals is regarding computation of the proportionate credit under rule 6(3A) of the CENVAT Credit Rules, 2004, 2004 Credit Rules. 3. The period in dispute is from August, 2014 to March, 2015 in Excise Appeal No. 51728 of 2019 and April, 2017 to June, 2017 in Excise Appeal No. 50773 of 2020. 4. The appellant is engaged in the manufacture of fertilizers, namely urea and single super phosphate and discharged central excise duty @1% valorem on urea and single super phosphate cleared by it in terms of the exemption benefit at Serial. No. 128 of the Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds (ammonia) _______________________________________________________ Assessable value of [dutiable goods (ammonia) +exempted goods (urea & SSP)] 5. Two show cause notices dated 15.06.2016 and 01.05.2019 were however, issued to the appellant proposing to demand CENVAT credit amounting to Rs. 93,72,490/- and Rs. 70,03,059/- for the reason that the appellant had availed excess CENVAT credit by including the value of urea and single super phosphate while computing proportionate credit and for recovery of the same with interest and penalty. The appellant filed a reply to the aforesaid notices denying the demand proposed, but the Joint Commissioner by orders dated 29.11.2017 and 02.09.2019 confirmed the demand of CENVAT credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad availed Cenvat credit of Rs. 1000/- and manufacture only ammonia and cleared it on payment of duty it can avail the entire Rs. 1000/- as Cenvat credit. On the other hand, if the assessee had converted the entire amount of ammonia into urea it would not have been eligible to any Cenvat credit because the urea is exempted. The value of urea makes no difference. On the other hand, if the appellant used 50% of the ammonia to make urea and had 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. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional production line and uses it once or twice to manufacture dutiable soft drinks and uses the plant for the rest of its life only to manufacture bottled water which is exempted, it will still be eligible for the complete Cenvat credit though it appears unfair on the face of it. 14. Be that as it may, we find that formula under Rule 6(3A) only requires the value of the exempted goods removed to be reckoned and not the value of the intermediate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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