TMI Blog2023 (5) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... GRANITIES LTD. [ 2014 (5) TMI 57 - GUJARAT HIGH COURT] where reliance placed in the case of COLLECTOR OF CENTRAL EXCISE, PATNA VERSUS TATA IRON STEEL CO. LTD. [ 2004 (2) TMI 68 - SUPREME COURT] , where the question of dutiability of such product came up before the Supreme Court on the ground that such product was a mere byproduct of the manufacturing activity. It was held that no excise duty would be leviable on Zinc Dross. It was observed that merely because the assessee was selling the said by-product, would not mean that the same was a marketable commodity. In short, the Supreme Court held that there was no excise duty liability on the sale of Zinc Dross. There are no merit in the impugned order and the same is set aside - appeal allowed. - Excise Appeal No. 85340 of 2013 - FINAL ORDER NO. 85464 / 2023 - Dated:- 23-2-2023 - HON BLE MR. SANJIV SRIVASTAVA , MEMBER ( TECHNICAL ) And HON BLE DR. SUVENDU KUMAR PATI , MEMBER ( JUDICIAL ) Shri Vinay S. Sejpal , Advocate , for the Appellant Shri Deepak Bhilegaonka r, Additional Commissioner , Authorised Representative for the Respondent ORDER PER : SANJIV SRIVASTAVA This appeal has been direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the month of March, 2010, totally amounting to Rs. 71,49,505/- (Rs. Seventy One Lakhs Forty Nine Thousand and Five Hundred and Five only) [Basic duty Rs.69,41,268/ + Ed. Cess Rs.138822/- and Rs.69,415/- only), should not be demanded and recovered from them under the provisions of Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944, (presently sub section (4) of Section 11A of Central Excise Act, 1944, w.e.f. 08.04.2011)by invoking the proviso thereto; ii) interest at appropriate rate should not be charged and recovered from them under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11 AB of the Central Excise Act, 1944(presently Section 11AA of Central Excise Act, 1944, w.e.f. 08.04.2011); and iii) Penalty should not be imposed on them under the provisions of Rule 15 of Cenvat Credit Rules 2004 read with Section 11AC of the Central Excise Act, 1944. 2.3 This show cause notice has been adjudicated as per the impugned order. Aggrieved appellant has filed this appeal. 3.1 We have heard Shri Vinay S. Sejpal, Advocate for the appellant and Shri Deepak Bhilegaonkar, Additional Commissioner, Authorised Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity of the product remains unchanged. 25 Further, even though the copy of said SCN dated 30.03.2011 issued to M/s CRIL was apparently not provided to M/s. KLT, the main points raised in that SCN also form part of Instant SCN dated 03.04.2012 issued to Ms. KLT. The SCN issued to assessee is a self contained document that explains the position of law in respect of manufacture, manufacturing activity, payment of duties and credit availment. It is not the case of assessee that he has been kept in dark on any issue on which duty is sought to be recovered from them. Paras 03 to 06 of SCN dated 03.04.2012 issued to M/s. KLT adequately justified the stands taken by department and assessee is made fully aware of all facts and demand/penalty. The instant SCN dated 03.04.2012 has been issued to M/s. KLT in consonance of principles of natural justice and adequate opportunity of being heard has also been accorded to them as per maxim audi alteram partem. 26. I observe that as per the provisions of Rule 3 of Cenvat credit Rules, 2004 read with Rule 6, credit of duty paid on inputs is allowed only if the inputs that are used in or in relation to the manufacture of the final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the department, assessees and legal fraternity but by the judiciary too. As can be seen from the Board's Circular No.584/21/2001- CX dated 07.09.2001 that the department had accepted the impugned process as manufacture wherein it was clarified that cutting of HR ICR coils of iron or non-alloy steel into sheets of sliding into strips of lesser width or sitting of sheets will amount to manufacture if the resultant products is classifiable under different sub-heading of the tariff However, this Circular has been withdrawn by the Board vide Circular No 811/8/2005-CX dated 02.03.05 in view of the Hon'ble Supreme Court's decision thereby setting the impugned issue. Therefore it is a fact that the manufacturer supplier has paid the duty despite of them not carrying any activity as per Section 2(f). 31. The assessee has challenged this by stating that they have gone through the provisions of Central Excise Act and rules made there under and that there are no provisions for Central Excise dept to treat any payment as a deposit with the department and to retain the same amount with them. The Central Excise act only empowers the govt to levy charge and recover Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised the CEVAT credit on the said inputs raw material received from Mis CRIL Hence the same is required to be recovered from the noticee as inadmissible. 41. Statute has changed to include under section 110 that every person, who has collected any amount as representing duty of excise on any excisable goods which are wholly exempt or are chargeable to nil rate of duty from any person in any manner, shall forthwith pay the amount so collected to the credit of the Central Government. Hence even by any stretch of imagination it cannot be presumed that duty has been levied on the impugned goods so as to allow CENVAT credit. The referred case law is inapplicable in the instant case Besides, the CBEC vide its Circular dated 26.09.2007 issued under F.No. 93/1/2005-CX3 had clarified that if the process does not amount to manufacture, duty is not required to be paid and hence no CENVAT credit of duty paid on inputs is admissible. 42. As per the provisions of Rule 3 of Cenvat credit Rules, 2004 read with Rule 6, credit of duty paid on inputs is allowed only if the inputs that are used in or in relation to the manufacture of the final product are chargeable to duty. It has been o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other activity like de-greasing, cleaning, etc. did not amount to manufacture and amounted to removal of inputs as such and accordingly the CENVAT credit availed was proposed to be disallowed for Rs. 3,64,02,946/- under Rule 14 of CENVAT Credit Rules, 2004. Similar show cause notice was also issued dated 1-11-2011 for similar activity for the month of October 2010 and January 2011 asking to show cause as to why CENVAT credit of Rs. 14,41,390/- be disallowed. The appellant appeared and contested the show cause notice but the demands were confirmed vide Order-in- Original dated 31-7-2012 along with equal amount of penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Being aggrieved the appellant have preferred the appeals before this Tribunal. 5. The first ground raised by the appellant is that the situation is revenue neutral and there is no loss of revenue as the appellant had cleared the goods with value addition which have resulted in payment of excess duty to the tune of Rs. 50,40,102/- (Rs. 4,31,30,855/- minus Rs. 3,78,44,226/-). The next ground taken is that the allegation in the show cause notice is self-contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treating it as revenue, then Revenue is precluded from taking a contrary stand and denying CENVAT credit for recovering the same amount again. 5(e) The next ground taken is that under the facts and circumstances the appellant having paid duty on removal of goods in question which is higher than the CENVAT credit availed the same results in reversion of CENVAT credit so availed. In support of this contention reliance is placed on the ruling of Hon ble Bombay High Court in the case of CCE, Pune-III v. Ajinkya Enterprises - 2013 (294) E.L.T. 203 (Bom.) wherein relying on the ruling of the Supreme Court in the case of Creative Enterprises v. Commissioner - 2009 (243) E.L.T. A120 the Hon ble Bombay High Court has held that assessment on decoiled HR/CR coils cleared from factory of assessee on payment of duty had neither been reversed nor it was held that assessee was entitled to refund of that duty at the time of clearance of the de-coiled HR/CR coils. Once duty on final products have been accepted by the department CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. Reliance was placed by the Bombay High Court on a similar view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Supreme Court on the ground that such product was a mere byproduct of the manufacturing activity. It was held that no excise duty would be leviable on Zinc Dross. It was observed that merely because the assessee was selling the said by-product, would not mean that the same was a marketable commodity. In short, the Supreme Court held that there was no excise duty liability on the sale of Zinc Dross. 4. The respondent assessee on purchase of such goods utilised the same as input in its own manufacturing activity and claimed Cenvat credit of the duty paid by the supplier. The Revenue contested this stand of the respondent on the ground that since no duty was payable on Zinc Dross by the manufacturer, in terms of Rule 3 of Cenvat Credit Rules, 2004, the assessee was not entitled to avail the credit of such duty. Ultimately, when the issue reached the Tribunal, the Tribunal in the impugned judgment relying on decision of Supreme Court in case of Commissioner of Central Excise Customs v. MDS Switchgear Ltd. reported in 2008 (229) E.L.T. 485 (S.C.), held that the assessee was entitled to Cenvat credit. 5. Shri Kogje for the department drawing our attention to Rule 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tata Iron and Steel Co. Ltd. (supra), no duty was payable on such product. Strictly speaking therefore, such amount deposited by the original manufacturer would not partake the character of excise duty. However, when the department did not dispute the classification of such manufacturer, accepted the declarations and duties, Cenvat credit on such duty cannot be declined to the purchaser of the goods who otherwise fulfilled all conditions tor availing Cenvat credit thereof. 9. Case is substantially similar to one before the Supreme Court in case of MDS Switchgear Ltd. (supra). In the said case, the Tribunal while accepting the department s allegation of inflation of the value of intermediate goods to load the assessable value, observed that if the department was of the opinion that the value of the final product was depressed, it could have charged the original manufacturer unit in under-invoicing their product. This was however, not done. Valuation was duly approved and the payment of duty was also accepted. The Tribunal further observed that We find absolutely no substance in the attempt of the learned Commissioner to convert a part of the duty so paid into deposit of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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