TMI Blog2008 (6) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... on of pure brine is cleared to the Makeup Water Plant (Salt Plant) for the manufacture of pure salt. 1.2 Appellants also manufacture vacuum salt, iodized vacuum salt and pure salt in their factory and these products attract nil rate of central excise duty. 1.3 The appellants have a captive power plant in their factory. In the captive power plant, the appellants generate electricity. The electricity so generated is used by the appellants in the soda ash plant. Part of the electricity is also supplied by the appellants to the salt plant which is engaged in the manufacture of exempted goods. 1.4 For the generation of electricity in the captive power plant, appellants use pet coke and furnace oil as fuel. The pet coke and furnace oil is first used for generation of steam which steam is further used for generation of electricity. Part of the steam generated is also used directly in the manufacture of soda ash. Admittedly, entire quantity of steam generated and electricity generated is used within the factory of production of steam or electricity. No part of steam or electricity is cleared outside the factory. 1.5 Appellants avail Cenvat credit of the duty paid on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purification of brine, a part of which was used in the manufacture of pure salt during the periods from 2001-02 to 2005-06. The show cause notice also proposed application of extended period on the ground of suppression and recovery of interest and imposition of penalty. The adjudication proceedings culminated into order-in-original No. 23/Commr./2007 dated 21-8-2007 confirming the demand as per the show cause notice, recovery of interest and penalty equal to the amount payable under Rule 6(3) read with Rule 14 of Cenvat Credit Rules, 2004. The appeal is against this order. 3.1 The grounds of appeal taken by the appellants are briefly explained below:- (A) On the demand of Rs. 22,41,76,788/- for the period from 16-5-2005 to 31-3- 2006 :- Effective from 16-5-2005, when inputs used as fuel were specifically excluded from the provisions of Rule 6(3), the appellants at the time of issue of furnace oil and pet coke for generation of steam/electricity, reversed the proportionate Cenvat credit attributable to the quantity of electricity used in salt plant and other non-excisable purposes by making necessary entries in the cenvat register. This is done by the appellants at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing case laws in support of their claim:- (a) Grasim Inds. Ltd. v. CCE - Final Order No. A/1877/WZB/2006- C.III/EB dated 8-9-2006. [2007 (219) E.L.T. 208 (T)] (b ) Reliance Inds. v. CCE - Final Order No. A/3081-3084/WZB/AHD/07 dated 18-12-2007. [2008 (224) E.L.T. 117 (T)] (c) Raymond Ltd. v. CCE, Mumbai-III - 2000 (117) E.L.T. 104 (T). Even if the provisions of Rule 6(3)(b) are to be invoked the same are to be invoked at the stage of steam or electricity 10% of the price of steam/electricity or alone is to be demanded. The appellant has worked out the quantum of steam used in the generation of electricity based on the records maintained by them for the disputed period and the amount payable is only Rs. 36,44,971/-. If electricity is treated as exempted final product, the amount payable would only Rs. 41,01,158/-. They cited the following decisions in support of this claim:- (a) Tata Chemicals Ltd. v. CCE - 2007 (214) E.L.T. 95 (b) Texmo Inds. v. CCE - 2007 (208) E.L.T. 338 (Tri.-LB). (B) Submissions on the demand of Rs. 2,77,15,038/- for the periods from 2001- 02 to 2005-06 under Rule 6(3)(b) :- The demand has been confirmed on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce oil can be said to have been used for the manufacture of steam/subsequently electricity and finally in the exempted products. Therefore, we find merit in the offer made by the ld. Advocate that they are willing to pay duty on steam or electricity used within the factory and once amount of 8% or 10% is paid on steam or electricity, requirements of Rule 6(3)(b) are fulfilled. This view also draws support from the decisions in M/s. Texmo Inds. v. CCE, Coimbatore [2007 (208) E.L.T. 338 (Tri.-LB)] and Tata Chemicals Ltd. v. CCE - 2007 (214) E.L.T. 95, even though the decision of M/s. Texmo Industries is in respect of the erstwhile Rule 57CC but since Rule 57CC and Rule 6 have not been considered in depth, it may not be correct to hold that both the rules are pan materia but Tata Chemicals case cited above is comparable on facts and relates to the present Rules and hence is relied upon. 6. After hearing both the sides and considering the arguments advanced, we find that the offer made by the ld. Advocate that they have already reversed the amount payable if steam or electricity is taken as exempted product in respect of the final products viz. Iodized salt/vacuum salt has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excise product as well as dutiable product was known to the Department, the same thing cannot be said about soda ash. It is quite possible that appellants may be accounting the soda ash separately and using the same for exempted products. Only on verification, it has been found that the soda ash used for manufacture of brine, which was in turn used for exempted product was not duty paid. Therefore, we feel that extended period has been rightly invoked. Further the fact that appellants on their own paid the duty on soda ash used for producing exempted goods on 5-9-2006 voluntarily also supports view. They have also claimed that they have reversed the credit also even though duty is paid on soda ash used for manufacture of exempted products, credit need not be reversed. However, the Commissioner has observed that this payment has been made without authority and without proper calculation. Therefore, the case will have to be remanded to the original Adjudicating Authority, who can get the correctness of the duty paid on the soda ash for the 5 year period by the appellants verified. Needless to say once duty is paid on the soda ash used in exempted goods, the reversal of the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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