CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL BANGALORE REGIONAL BENCH - COURT NO. 1 Central Excise Appeal No.20054 of 2022 Central Excise Cross Objections No.20050 of 2022 (Arising out of Order-in-Original No.BEL-EXCUS-000-COM-SHD-044-

2020-21-C.EX dated 26.03.2021 passed by the Commissioner of Central Tax(CGST) and C entral Excise, Belgaum)

The Commissioner of Central Tax (CGST) & Central Excise, Appellant(s)

71, Club Road, Belagavi.

VERSUS M/s. Mukand Limited, Hospet Road, Ginigera, Respondent(s)

Koppal District, Karnataka.

APPEARANCE:

Mr. Vinod Kumar Garhwal, Superintendent (AR) for the Appellant.

Mr. M.S. Nagaraja, Advocate for the Respondent.

CORAM: HON’BLE MR. D.M. MISRA, MEMBER (JUDICIAL)

HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20522 /2026 DATE OF HEARING: 25.02.2026 DATE OF DECISION: 25.02.2026 PER: D.M. MISRA This is an appeal filed by the Revenue against Order-in-

Original No. BEL-EXCUS-000-COM-SHD-004-2020-21-C.EX dated 26.03.2021 passed by the Commissioner of Central Tax, Belgaum.

2. Briefly stated the facts of the case are that the respondent are engaged in the manufacture of alloy / non-alloy steel and billets / blooms / rounds of alloy steel falling under Chapter 72 of Central Excise Tariff Act, 1985. They procured iron ore from outside and subjected it to the process of screening / sorting on a conveyor belt to segregate iron ore fines which is an exempted final product and cannot be used in the manufacture of steel but it is marketable and sold to other potential buyers. It is alleged that since iron ore fines which emerge during the course of screening being exempted products, the cenvat credit availed on common input services viz. GTA services etc. which were used in the manufacture of dutiable as well as exempted goods without maintaining separate inventory of receipt and consumption of such services, accordingly cenvat credit attributable to input services used in the generation of iron ore fines are not eligible. Since the appellant has failed to maintain separate records, show-cause notice was issued to the respondent on 03.07.2014 for demand of an amount of Rs.2,06,28,928/- which is equal to 5% / 6% of the value of the exempted iron ore fines for the period from July 2009 to July 2012 with interest and penalty. On adjudication, the demand was dropped by the adjudicating authority. Hence, the Revenue is in appeal. Respondent has also filed cross-objections.

3. Reiterating the grounds of the appeal, the learned AR for the Revenue has submitted that the iron ore fines which are generated during the course of screening of iron ore are cleared / sold to buyers. Since Iron ore fines exempted from payment of duty, respondent is required to pay an amount of 5% / 6% o the value. The reliance placed by the learned Commissioner on the judgments which relate to Bagasse, coke fines etc. since not related to iron ore fines, is not applicable to the present case. Further referring to the judgment of the Chhattisgarh High Court in the case of CCE,C&ST, Bilaspur Vs. Salasar Sponge & Power Ltd. [2020(371) ELT 256 (Chhattisgarh) which remanded the matter to the adjudicating authority to re-examine the issues, it is the contention of the Revenue that the issue is not attained finality; therefore, the learned Commissioner has erred in holding that the iron ore fines are not subjected to Rule 6(3) of Cenvat Credit Rules, 2004.

4.1. On the other hand, the learned advocate for the respondent has submitted that the respondent procures Iron Ore ROM (Run of Mines). The naturally occurring iron ore contains both iron ore lumps and fines. The iron ore as procured by the respondent is subjected to the process of screening over the conveyor system for sorting or segregation of iron ore fines of size below 5mm which clog the furnace and hence not used in the factory and therefore treated as waste materials and sold to the buyers at NIL rate of duty as applicable. The iron ore of size above 5mm is charged to furnace. Ref