| The Tax Publishers2020 TaxPub(EX) 1003 CENVAT CREDIT RULES, 2004
Rule 6(3)
Where assessee cleared part of Ammonia being Surplus, on payment of duty, admittedly, the final product being cleared was Ammonia and becomes the dutiable goods manufactured by assessee, further, captively consumed Ammonia cannot be treated as exempted final product by any stretch of imagination and final product of assessee was Ammonia, Urea and SSP, value of which was taken for computation under rule 6 (3A), therefore, case of Revenue was mis-conceived and show cause notice was bad.
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Cenvat credit - Reversal of CENVAT Credit - Non-maintenance of separate records -
Assessee was engaged in manufacture of urea and Single Super Phosphate (SSP) and was clearing Urea and SSP @ 1% ADV., being fertilizer exempted in terms of Sl.No. 128 of Notification No. 12/2012, dated 17-3-2012. The main input of assessee was compressed natural gas (CNG). Ammonia is further processed along with other inputs to manufacture urea. Captive consumption of Ammonia was exempt from payment of duty under Sl.No. 86 of Notification No. 12/2012. Assessee was not maintaining separate accounts for input/input services received with respect to the exempted and dutiable final products. He opted under rule 6(3)(ii) for reversing the proportionate credit attributable to clearance of finished exempted goods. Department raised demand on the ground that assessee had availed excess credit by including the value of the urea/SSP, while computing the proportionate credit. Held: When assessee cleared part of Ammonia being Surplus, on payment of duty, admittedly, the final product being cleared was Ammonia. Therefore, Ammonia becomes dutiable goods manufactured by assessee. Majority of Ammonia so produced, however, is used as an intermediate product and consumed for the manufacture of Urea. Thus, the captively consumed Ammonia cannot be treated as exempted final product by any stretch of imagination. The final product of assessee was Ammonia, Urea and SSP, value of which was taken for computation under rule 6(3A). Rule 6(3)(i) provides for payment of an amount equal to 6% of value of the exempted goods and 7% of value of the exempted services. Therefore, case of Revenue was mis-conceived and show cause notice was bad.
REFERRED : Commissioner of Central Excise, Nagpur v. M/s. Ballarpur Industries Ltd 2007 (8) SCC 89 : 2007 TaxPub(EX) 2012 (SC) Commissioner of Central Excise v. Customs, Excise & Service Tax Appellate Tribunal 2013 (294) ELT 372 (Madras) : 2013 TaxPub(EX) 1172 (Mad) Commissioner of Central Excise, Thirunelveli v. DCW Ltd. 2011 (274) ELT 183 (Madras) : 2011 TaxPub(EX) 1683 (Mad)
FAVOUR : In assessee's favour
A.Y. :
IN THE CESTAT, NEW DELHI BENCH
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