- (1.) Delay in refiling the appeal is condoned. This appeal has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (in short "the Act") against the order dated 31-3-2010 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as "the Tribunal") in appeal No. C/23/08, claiming the following substantial question of law :- Whether the Tribunal (CESTAT) is justified in law in holding that the assessee is not required to reverse the Cenvat Credit as per Rule 6(3)(b) of the Cenvat Credit Rules against the inputs used in the manufacture of exempted finished products originated along with the manufacture of dutiable finished products?
(2.) Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee is engaged in the manufacture of vegetable product (Vanaspati), Refined Oil and Liquid Glucose. During the course of manufacture of Liquid Glucose from wheat and rice, the by-product i.e. Gluten (S.H. 1104.00) and Spent Carbon (S.H. 3802.00), are generated which are fully exempted from duty. Similarly, Refined Oil and Vanaspati by-product, i.e. Spent Earth (S.H. 1507.00), was generated which was also exempted from duty. Since the said by products have been generated as a result of consumption of common cenvatable inputs, namely. Hydrochloric Acid (HCL), Enzymes etc., the assessee was required to reverse an amount equal to 10% of the sale price of the said Gluten, Spent Carbon and Spent Earth at the time of clearance in terms of Rule 6(3)(b) of the Cenvat Credit Rules. The assessee had not opted to maintain separate accounts of manufacture of dutiable and exempted goods and was, therefore, required to pay 10% of the total sale price of the exempted final product as duty. Accordingly, the assessee was issued show cause notice dated 4-8-2005 for the recovery of an amount of Rs. 4,19,791/- (equal to 10% of the total sale price of the exempted final product) along with interest and penalty. The Assistant Commissioner, Central Excise Division-II, Jalandhar vide order-in-original dated 18-4-2006 dropped the proceedings. The department accepted the part of the order relating to demand of Rs. 8126/- pertaining to Spent Carbon and Spent Earth. Feeling aggrieved against remaining amount of Rs. 4,11,665/-, the department filed an appeal before the Commissioner (Appeals) challenging the dropping of demand of Rs. 4,11,665/- against the clearance of Gluten falling under Chapter sub-heading No. 1104.00 who, vide order dated 4-10-2007 dismissed the appeal. On further appeal by the revenue, the Tribunal vide final order dated 31-3-2010 upheld the order of the Commissioner (Appeals) and dismissed the appeal. Hence, the present appeal by the department.
(3.) We have heard learned counsel for the appellant.;