2008 (4) TMI 574 - AT - Central Excise

Summary

Issues involved:
The issues involved in this case are the availing of Cenvat credit on inputs used for manufacturing exempted goods without maintaining separate inventory, and the imposition of penalty under Rule 15 of the Cenvat Credit Rules, 2004.

Issue 1: Availing of Cenvat credit without maintaining separate inventory
The appellants, engaged in manufacturing refined edible oil, availed Cenvat credit on inputs like HDPE granules and tinplates used for packaging materials. A show cause notice was issued for not maintaining separate accounts for inputs used in manufacturing dutiable and exempted goods. The Commissioner (Appeals) upheld the demand for 10% of the value of exempted goods cleared, as per Rules 6(1), 6(2), and 6(3)(b) of Cenvat Credit Rules, 2004. The appellants' failure to maintain separate accounts led to the confirmation of the demand.

Issue 2: Imposition of penalty under Rule 15 of Cenvat Credit Rules, 2004
The penalty imposed on the appellants under Rule 15 was contested, as the appellants argued that the penalty should not apply since the credit was not availed due to fraud or contravention. The Tribunal noted that the penalty under Rule 15 is applicable in cases of fraud or contravention, which was not established in this instance. Therefore, the penalty imposed under Rule 15 for non-maintenance of separate inventory was deemed unwarranted.

Conclusion:
The Tribunal upheld the demand for 10% of the value of exempted goods cleared due to the appellants' failure to maintain separate inventory. However, the penalty imposed under Rule 15 was set aside as it was not justified in this case. The appeal was disposed of accordingly, with the decision pronounced on 15-4-2008.