2006 (10) TMI 372 - AT - Central Excise

Summary

Issues:
1. Whether the appellant is liable to pay duty on clearances made without maintaining separate accounts for dutiable and exempted goods.
2. Whether reversal of Cenvat credit availed on exempted goods justifies the demand for duty on clearances made to another entity for dutiable goods.

Issue 1:
The case involved the appellant, a manufacturer of M.S. Cement coated pipes, who availed Cenvat credit on various inputs. The appellant had a contract for a project exempted from duty, but also manufactured dutiable pipes for another entity without separate accounts. The issue was whether the appellant should pay duty for clearances without separate accounts. The Tribunal referred to a previous judgment in a similar case and held that since the appellant had reversed the Cenvat credit for exempted goods, the demand for duty on clearances to the other entity was not justified. The Tribunal emphasized that maintaining separate accounts was not relevant in this context, as per the cited judgment. Consequently, the impugned order was set aside, and the appeal was allowed.

Issue 2:
The second issue revolved around whether the reversal of Cenvat credit on exempted goods justified the demand for duty on clearances made to another entity for dutiable goods. The appellant argued that the issue was identical to a previous case where the Tribunal had ruled in favor of the assessee. The Tribunal agreed with the appellant's submission, stating that the reversal of Cenvat credit on exempted goods justified the availment of Modvat credit for duty-paying goods. The Tribunal upheld that the demand for duty was not justified based on the previous judgment. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.

In conclusion, the Tribunal found in favor of the appellant on both issues, emphasizing the relevance of previous judgments in similar cases. The decision highlighted the importance of reversing Cenvat credit on exempted goods and clarified that maintaining separate accounts was not a determining factor in justifying duty demands. The judgment provided clarity on the treatment of Cenvat credit in cases involving both exempted and dutiable goods, ensuring consistency in decision-making.