ORDER
S.S. Kang, Vice-President
1. Common issue is involved in these appeals, therefore, they are being taken up together.
2. Brief facts of the case are that the respondents are engaged in the manufacture of excisable as well as exempted goods. The respondents are availing the benefit of Modvat credit in respect of duty paid on Residual Furnace Oil which is used to generate steam. The steam so generated is used in or in relation to the manufacture of dutiable as well as exempted goods.
3. The respondent reverse the credit in respect of the input i.e. Residual Furnace Oil used in the manufacture of exempted goods. A SCN was issued to the respondent for demanding duty amount equal to 8% of the value of exempted goods as respondents are availing the credit in respect of inputs used in the manufacture of dutiable and exempted goods.
4. The Commissioner of Central Excise vide impugned order after relying upon the provisions of Rule 6 of Cenvat Credit Rules, 2001 disallowed the CENVAT credit on such quantity of inputs which is used in the manufacture of exempted goods.
5. The contention of the Revenue is that as respondents are not maintaining separate record in respect of the inputs on which credit has availed regarding inputs used in the manufacture of dutiable as well as exempted goods and Revenue relied upon the circular issued by the Board dated 16-10-2001 to submit that where separate record has not been maintained, the manufacturer has to pay 8% of the value of the exempted goods.
6. We find that Rule 6 of Cenvat Credit Rules, 2001 clearly provides that Cenvat credit shall not be allowed in respect of quantity of inputs which is used in the manufacture of exempted goods. The Board circular dated 16-10-2001 relied upon by the Revenue provides that where separate record has not been maintained in respect of inputs on which credit has been taken, regarding their use in dutiable as well as exempted goods, manufacturer has to pay 8% of the value of exempted goods. The Board further issued a circular dated 19-8-2002 whereby it was clarified that the provisions of circular dated 16-10-2001 will apply only for the period prior to issue of Cenvat Credit Rules, 2002. Further we find that Rule 57AD(2)(b) provides for payment of amount equal to 8% of price of exempted products in case modvatable inputs are used both for manufacture of exempted and dutiable final products where manufacturer cannot provide for separate storage and accountal of modvatable inputs going into manufacture of exempted products. Further reading of this Rule provides that inputs used as fuel are excluded from the scope of Rule 57AD(2)(b) of Cenvat Credit Rules. The Rule 57AD(2) applies for ‘other than fuel’. In the present case, RFO is used as ‘fuel’ for generation of the steam. Therefore, in these circumstances, we find no infirmity in the impugned order. These appeals are rejected.