2009 (4) TMI 605 - AT - Central Excise

Summary

The Appellate Tribunal CESTAT, Kolkata, consisting of Shri S.S. Kang and Dr. Chittaranjan Satapathy, JJ., heard an appeal represented by Shri K.P. Singh, SDR, for the Appellant and Shri Anjan Sarkar, C.A., for the Respondent. The appellants, M/s. TIL Ltd., engaged in manufacturing excisable goods, cleared goods to Defence Research Organization under an exemption notification without payment of duty. The Revenue claimed the appellants should pay 8% of the price of the exempted goods due to availing credit for common inputs used in both duty-paid and duty-exempted goods. The Commissioner (Appeals) allowed TIL Ltd.'s appeal, leading the Revenue to file the present appeal.

TIL Ltd. argued they were unaware beforehand which goods would be cleared under exemption and reversed credit proportionately when clearing exempted goods. The Revenue contended that the appellants should have maintained separate records for inputs used in exempted goods, which they failed to do. The Tribunal found that TIL Ltd. had reversed credit for inputs used in goods cleared to defense organizations under the exemption notification. Consequently, the demand was deemed unsustainable, and the appeal by TIL Ltd. was allowed. The Tribunal dismissed the Revenue's appeal, finding no merit, and disposed of the cross objection filed by the assessee accordingly.

The judgment ultimately favored TIL Ltd., ruling in their favor against the Revenue's claims. The case highlights the importance of maintaining accurate records and adhering to tax regulations in manufacturing and clearing goods under exemptions.