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2008 (5) TMI 564 - AT - Central ExciseCENVAT Credit - manufacture of excisable as well as exempted goods by using common inputs - non-maintenance of separate records - liability to pay 8% or 10% of the value of exempted goods - demands beyond the normal period of limitation - Suppression of facts or not. HELD THAT - Demand is for the period 30-4-2003 to 28-2-2005. Two show cause notices were issued, one for the period 30-4-2003 to 30-11-2004 on 21-9-2005 by invoking extended period of limitation and, second for the period 1-12-2004 to 28-2-2005 on 9-11-2005. The appellants were regularly filing monthly return showing clearance of goods on payment of duty as well as without payment of duty. On examining the returns the Revenue vide letter dated 26-6-2003 directed the appellants to pay 8% of the value of exempted goods. As the Revenue was aware on 26-6-2003 that the appellants were taking credit in respect of common inputs and clearing products without payment of duty as well on payment of duty, therefore, charge of suppression of facts with intent to evade payment of duty is not sustainable, hence, the demands beyond the normal period of limitation are time-barred, hence liable to be set aside. Demand of remaining period - HELD THAT - This situation is covered by the Tribunal judgment in the case of MAIZE PRODUCTS VERSUS CCE 2007 (1) TMI 583 - CESTAT AHMEDABAD where it was held that The department shall redetermine the credit taken on the common inputs i.e., caustic soda lye and hydrochloric acid in so far as they relate to demand proposed in the 9 show cause notices - In view of the decision of the Tribunal the demand for the normal period is set aside and the matter is remanded to the adjudicating authority with the direction to accept the offer of the appellants to reverse the entire credit on the common inputs and the Revenue shall redetermine the credit taken on common inputs and the appellants will produce necessary evidence in respect of credit availed on common inputs. Impugned order is set aside and the appeal is disposed of.
Issues:
- Liability to pay 8% or 10% of the value of exempted goods under Rule 6(3)(b) of CENVAT Credit Rules. - Allegation of suppression with intent to evade payment of duty. - Applicability of extended period of limitation for demand. - Reversal of credit availed on common inputs used in manufacturing excisable and exempted goods. Analysis: Liability to pay 8% or 10% of the value of exempted goods under Rule 6(3)(b) of CENVAT Credit Rules: The appellants were manufacturing excisable and exempted goods using common inputs and taking credit for the same. The Revenue contended that as per CENVAT Credit Rules, the appellants were liable to pay 8% or 10% of the value of exempted goods. The Tribunal found that the demands for duty were made for the period from 30-4-2003 to 28-2-2005. The Revenue issued show cause notices invoking the extended period of limitation. However, as the appellants were regularly filing returns showing clearance of goods with and without duty payment, the charge of suppression with intent to evade payment of duty was deemed unsustainable. Therefore, demands beyond the normal limitation period were considered time-barred and set aside. Allegation of suppression with intent to evade payment of duty: The Revenue alleged that the appellants suppressed facts with intent to evade duty payment as they were not maintaining separate records for common inputs used in manufacturing excisable and exempted goods. However, the Tribunal found that the Revenue was aware of the appellants' practices as early as 26-6-2003, and thus, the charge of suppression was not sustainable. The demands made beyond the normal limitation period were considered time-barred and set aside. Applicability of extended period of limitation for demand: The Revenue issued show cause notices for demand of duty covering different periods, invoking the extended period of limitation. However, the Tribunal noted that as the appellants were transparent in their filings and the Revenue was aware of their practices, the demands beyond the normal limitation period were deemed time-barred and set aside. Reversal of credit availed on common inputs used in manufacturing excisable and exempted goods: The appellants offered to reverse the entire credit availed on common inputs used in the manufacturing process. The Revenue relied on a Supreme Court decision to argue against the reversal of credit after goods clearance. However, the Tribunal referred to a previous decision and accepted the appellants' offer to reverse the credit. The Tribunal directed the adjudicating authority to redetermine the credit taken on common inputs and instructed the appellants to provide necessary evidence. The impugned order was set aside, and the appeal was disposed of accordingly. In conclusion, the Tribunal found in favor of the appellants, setting aside the demands for the normal period and remanding the matter to the adjudicating authority to accept the offer of the appellants to reverse the entire credit on common inputs. The Revenue was directed to redetermine the credit taken on common inputs, and the appellants were instructed to provide the necessary evidence.
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