2003 (11) TMI 331 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of demanded sum under Cenvat Credit Rules, 2002 and penalty imposition.
2. Maintenance of separate accounts for inputs used in manufacturing exempted and non-exempted goods.
3. Recovery of amounts payable under different rules and provisions.
4. Application of Rule 6 of Cenvat Credit Rules, 2002 to credit taken under preceding rules.
5. Utilization of inputs for manufacturing finished goods.
6. Retrospective application of recovery provisions under Cenvat Credit Rules.

Issue 1: Waiver of deposit and penalty imposition
The judgment pertains to an application for the waiver of a demanded sum under Cenvat Credit Rules, 2002 and penalty imposition. The appellant, engaged in manufacturing desalination plants, faced demands for duty payment due to alleged non-maintenance of separate accounts for inputs used in manufacturing exempted products. The Commissioner confirmed the demand and imposed penalties. The appellant sought waiver based on maintaining separate accounts in most cases and debiting credits taken for urgent occasions. The Tribunal directed the deposit of a specific amount within two months, waiving the remaining sum and the penalty on the managing director.

Issue 2: Maintenance of separate accounts
The appellant maintained separate accounts for inputs used in manufacturing exempted and non-exempted goods, except on some urgent occasions. The appellant argued reliance on a Supreme Court judgment and contended that recovery provisions did not apply to the credit taken under earlier rules. The Tribunal noted the absence of material substantiating the claim that no inputs from credited amounts were used for manufacturing finished goods during the period in question.

Issue 3: Recovery of amounts under different rules
The judgment analyzed the recovery of amounts payable under various rules and provisions, emphasizing the application of Rule 6 of Cenvat Credit Rules, 2002 for recovery along with interest. The Tribunal discussed the applicability of recovery provisions and the reversal of credits taken, distinguishing previous judgments and statutory requirements.

Issue 4: Application of Rule 6 to preceding rules
The Tribunal examined the application of Rule 6 of Cenvat Credit Rules, 2002 to credits taken under preceding rules. It highlighted the provisions of Rule 9 and Rule 14, emphasizing that the recovery provisions under Rule 6(3) did not apply retrospectively to the earlier period.

Issue 5: Utilization of inputs for finished goods
The judgment addressed the utilization of inputs for manufacturing finished goods, noting the lack of substantiation regarding the claim that no inputs from credited amounts were used during the relevant period. The Tribunal stated that determining whether credits were utilized at that stage was not within the scope of the current proceedings.

Issue 6: Retrospective application of recovery provisions
The Tribunal discussed the retrospective application of recovery provisions under Cenvat Credit Rules, emphasizing that Rule 6(3) did not apply to credits taken under preceding rules. It highlighted the provisions of Rule 3 and ruled on the deposit amount to be made by the applicant within a specified timeframe, waiving the remaining sum and penalties accordingly.