CENVAT Credit - Separate Accounts - Duty on Exempted Goods - Assesses were availing the Cenvat credit of Service Tax paid on the input services such as GTA services and Customs House Agents Service - Department was of the view that though common Cenvat credit availed input and input services were being used in the manufacture of dutiable as well as exempted final products, the appellants were not maintaining separate account and inventory of the inputs meant for dutiable and exempted final products and hence in accordance with the provisions of Rule 6(3)(b)/6(3)(i) of Cenvat Credit Rules, 2004, the appellants were liable to pay an amount equal to 10 of value of the exempted goods - Held that - During the period no credit of additional customs duty was taken and service tax credit taken initially was subsequently reversed - the provisions of Rule 6(3)(b)/6(3)(i) read with Rule 6(2) will not apply and the demand under Rule 6(3)(b) would not be sustainable - The Appellants were not taking Cenvat credit of additional customs duty on Zinc Skimming in proportion to the quantity of the Zinc Ash part of the Zinc Skimmings used in the manufacture of the exempted product Zinc Sulphate, the provisions of Rule 6(3) would not be applicable. Even if the manufacturer wanted to fulfil the condition of Rule 6(2), he cannot do so, as it was impossible - it would be impossible for the Appellant to maintain separate account and inventory of Zinc Skimming meant for use in the manufacture of Zinc Sulphate and the Zinc Skimming meant for use in the manufacture of Zinc Ingots - Lex Non Cogit ad impossibilia - Law does not compel a person to do that which was impossible, was a well settled legal principle applied even in taxation matters. Prima facie it was impossible for the Appellants to maintain separate account and inventory of Zinc Skimming used for manufacture of Zinc Ingots and Zinc Sulphate (Agriculture grade) for the reason that one final product was the by product of the other, Rule 6(3)(b)/6(3)(i) read with Rule 6(2) of Cenvat Credit Rules, cannot be invoked - the Appellants were following the next best option - determining the proportionate Cenvat credit attributable to Zinc ash component of the Zinc Skimming and not availing the same. The requirement of pre-deposit of the amount demanded under Rule 6(3)(b)/6(3)(i), of Cenvat Credit Rules, 2004, interest and penalty was waived for hearing of the appeals and the recovery was stayed till the disposal of the appeal - Stay Applications were allowed............................... Central Excise - Case Law
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