Laxmi Cement Vs. Commissioner of Central Excise

Laxmi Cement vs Commissioner of Central Excise

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Sep 27, 2002

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Citation: sooperkanoon.com/28988
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Judge: S Kang, a T V.K.
Decided On: Sep 27, 2002
Subject: Excise

Case Summary

AI-generated summary - not the official court judgment text.

Excise

Key legal issue: Excise

Parties & Advocates

Appellant / Petitioner

Laxmi Cement

Respondent

Commissioner of Central Excise

Legal References

Reported In: (2003)(160)ELT668TriDel

Excerpt

2. the appellants had filed this appeal against the adjudication order passed by the commissioner of central excise. the appellants are engaged in the manufacture of cement and clinker and were availing the modvat credit in respect of explosives used in their mines. a show cause notice was issued to the appellants to recover an amount of 8% under rule 57cc of central excise rules on the value of limestone cleared to their other unit without payment of duty. the demand was made on the ground that the appellants were availing the credit of duty paid on explosives used for getting limestone which were cleared without payment of duty.3. the contention of the appellants is that they had already reversed the credit taken on the duty paid on explosives, therefore, demand is not sustainable. the appellants relied upon the circular issued by the govt. of india dated 16-10-2001. he submits that where a manufacturer in manufacturing excisable goods as well as exempted goods and were maintaining a separate record in respect of inputs used in the manufacture of exempted goods the manufacturer has to reverse the credit taken on the inputs used in the manufacturer of exempted goods.the appellants also relied upon the larger bench decision of the tribunal in the case of indian iron & steel co. [2002 (143) e.l.t. 442 (tri.) - 2002 (51) rlt 154] wherein the tribunal after relying upon the above mentioned circular remanded the matter to the adjudicating authority for deciding the matter afresh.4. the revenue submitted that the circular dated 16-10-2001 was amended by a circular dated 19-8-2002, reported in 2002 (144) e.l.t. t34 to the extent that the manufacturer has to maintain a separate record in respect of inputs used in the manufacturer of exempted goods.5. it is not disputed by the revenue that the appellants had already reversed the credit taken on explosives used in their mines. the circular dated 16-10-2001 issued by the govt. of india clarifies that "the matter has been.....

Full Judgment

2. The Appellants had filed this appeal against the Adjudication Order passed by the Commissioner of Central Excise. The Appellants are engaged in the manufacture of cement and clinker and were availing the Modvat credit in respect of explosives used in their mines. A show cause notice was issued to the Appellants to recover an amount of 8% under Rule 57CC of Central Excise Rules on the value of limestone cleared to their other unit without payment of duty. The demand was made on the ground that the Appellants were availing the Credit of duty paid on explosives used for getting limestone which were cleared without payment of duty.

3. The contention of the Appellants is that they had already reversed the Credit taken on the duty paid on explosives, therefore, demand is not sustainable. The Appellants relied upon the Circular issued by the Govt. of India dated 16-10-2001. He submits that where a manufacturer in manufacturing excisable goods as well as exempted goods and were maintaining a separate record in respect of inputs used in the manufacture of exempted goods the manufacturer has to reverse the Credit taken on the inputs used in the manufacturer of exempted goods.

The Appellants also relied upon the Larger Bench decision of the Tribunal in the case of Indian Iron & Steel Co. [2002 (143) E.L.T. 442 (Tri.) - 2002 (51) RLT 154] wherein the Tribunal after relying upon the above mentioned Circular remanded the matter to the Adjudicating Authority for deciding the matter afresh.

4. The Revenue submitted that the Circular dated 16-10-2001 was amended by a Circular dated 19-8-2002, reported in 2002 (144) E.L.T. T34 to the extent that the manufacturer has to maintain a separate record in respect of inputs used in the manufacturer of exempted goods.

5. It is not disputed by the Revenue that the Appellants had already reversed the Credit taken on explosives used in their mines. The Circular dated 16-10-2001 issued by the Govt. of India clarifies that "the matter has been examined in the Board. It is stated that the basic principle underlying the Cenvat scheme is that credit is admissible if duty is paid on final products. Attention is drawn to Sub-rule (1) of Rule 6 of the Cenvat Credit Rules, 2001, which clearly provides that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in circumstances specified in Sub-rule (2). The provisions of Sub-rules (2) and (3) of Rule 6 provide as to how to deal with an account for the inputs and credit of duty in cases where the inputs are used in manufacture of both dutiable as well as exempt products. It follows from the provisions that if the manufacturer does not fulfil the requirements of either Sub-rule (2) (i.e. maintaining separate accounts) or Sub-rule (3) [i.e. paying 8% of total price of exempted goods, other than exceptions specified in Clause (a)] then in terms of Sub-rule (1) the assessee shall not be allowed credit on such quantity which is used in the manufacture of exempted goods. Consequently, where the assessee has not paid the amount the availment of corresponding credit on inputs is incorrect. The recovery of such credit taken incorrectly is squarely covered by the provisions of Rule 12 (erstwhile Rule 57-I). Necessary action may be taken accordingly." 6. This Circular was not before the Adjudicating Authority for consideration. Therefore, the impugned Order is set aside and the matter is remanded to the Adjudicating Authority for deciding afresh after taking into consideration the above mentioned Circular as amended. The Adjudicating Authority will decide the matter after affording a reasonable opportunity of hearing to the Appellants.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Laxmi Cement vs Commissioner of Central Excise Same Subject Excise Same Judge S Kang, a T V.K.