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TMI Blog2024 (3) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of cenvat credit on inputs and input services used for manufacture of their various dutiable as well as exempted goods and maintaining common accounts of availment / utilization of Cenvat Credit paid on Inputs and Input services. In this regard, amongst other option available under Rule 6 of the CCR, the appellant had opted to pay an amount equivalent to the Cenvat Credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods in terms of conditions and procedure and formula specified in sub-rule 6(3A) of the CCR. Appellant intimated action taken under Rule 6(3A) of the CCR from time to time to the jurisdiction central excise range. The department observed that the final amount determined by the Appellant were not in accordance with the provisions of the Rule 6(3A)(c) of CCR. As per revenue appellant were required to have taken into consideration "total cenvat credit availed during the financial year' whereas appellant has considered 'common credit on inputs and input services used for manufacture of dutiable and exempted products.' Further appellant had adopted assessable value of the exempted goods as against the transaction v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not being applicable in case of LPG & SKO, being a by -products. The Ld. Commissioner has ignored and overlook the Judgment of the Hon'ble High Court of Gujarat in the case of Reliance Industries Ltd. [2022(382)ELT 53(Guj.)] wherein the Hon'ble High Court held that LPG is a by-product generated in the process of refining and no reversal is required to be attributable towards the value of LPG, since the taxable final product could not have been produced using any lesser quantity of inputs. The Ld. Commissioner has erred in holding that the said LPG was a product intentionally produced by the appellant and the same was not accidentally generated in the process of manufacture. The ratio laid down in the said judgment in the context of LPG squarely applies in respect of SKO as well. In support, he also placed reliance on the following judgments:- * Reliance Industries Ltd. [2023-TIOL-1130-HC-AHM-CX] * Reliance Industries Ltd. [Excise Appeal No. 89137 of 2013, Final Order No. A/86163/2023 dtd. 19.07.2023] * Reliance Industries Ltd. [Excise Appeal No. 11697 of 2017, Final Order No. A/12628-12630/2021 dtd. 20.12.2021] * Reliance Industries Ltd. [Excise Appeal No. 1498 of 2012, Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit taken on Input and Input services" should include only common Input and Input services used in exempted manufactured goods. 4.1. In order to appreciate contentions, it will be appropriate to refer to the relevant provisions of Rule 6 of the Rules and it is as follows : "Rule 6. Obligation of a manufacturer or producer of final products and a provider of taxable service. - (1) The CENVAT credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacturer of exempted goods and their clearance upto the place of removal or for provision of exempted services except in the circumstances mentioned in sub-rule (2) : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) ******** (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, optin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Superintendent of Central Excise giving the following particulars, namely :- (i) name, address and registration No. of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of dutiable goods or output services; (iv) description of exempted goods or exempted services; (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition; (b) the manufacturer of goods or the provider of output service shall, determine and pay provisionally, for every month, - (i) the amount equivalent to CENVAT credit attributable to inputs used in or relation to manufacture of exempted goods, denoted as A; (ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional) = (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of output services provided plus the total value of exempted services provided, during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent of Central Excise giving the following particulars, namely :- (i) name, address and registration number of the manufacturer of goods or provider of output service; (ii) date from which the option under this clause is exercised or proposed to be exercised; (iii) description of inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services and description of such exempted goods removed and such exempted services provided; (iv) description of inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services and description of such non-exempted goods removed and non-exempted services provided; (v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition; (b) the manufacturer of final products or the provider of output service shall determine the credit required to be paid, out of this total credit of inputs and input services taken during the month, denoted as T, in the following sequential steps and provisionally pay every month, the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; (vi) where manufacturer or the provider of the output service fails to pay the amount determined under sub-clause (i) or sub-clause (iv), he shall be liable to pay the interest from the due date of payment till the date of payment of such amount, at the rate of fifteen per cent. per annum." 4.4 From the above it can be seen that when anomaly was noticed, the Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub-rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory. In the case of GOI v. Indian Tobacco Association 2005 (187) E.L.T. 162 (S.C.) (supra), the Hon'ble Supreme Court held that "the word "substitute" ordinarily would mean "to put (one) in place of another"; or "to replace". In Black's Law Dictionary, Fifth Edition, at page 128 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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