2009 (10) TMI 697 - AT - Central Excise

CENVAT credit - Rule 6(3)(b) of CCR - the appellants neither maintained separate accounts in respect of the exempted finished goods nor kept the department informed about the clearance of the exempted goods - extended period of limitation - Held that - it is well known that the department has a regular programme of audit, under which different units are audited according to the frequency laid down, for example, a bigger unit having more transactions and paying more revenue is audited more frequently, say, once in 6 months. It cannot be a case of anybody that since all the excisable units are being audited by the department from time to time, the extended period of limitation will not apply in respect of any unit. Such an interpretation would render the relevant legal provision regarding application of extended period of time totally redundant and hence cannot be accepted. The appellants did not maintain separate accounts of receipt, consumption and inventory of inputs which were used in the manufacture of dutiable final products as well as exempted goods removed to its sister concern without payment of duty. There is also no evidence on record to support the claim of the appellants that it had submitted particulars of removal of exempted goods to the department. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Classification of brine solution as an excisable product.
2. Admissibility of credit of duty paid on raw materials.
3. Application of Rule 6(3)(b) for payment of duty on exempted goods.
4. Limitation period for duty demand.
5. Prima facie case for reducing duty demand period.
6. Disclosure requirements for extending benefit of notification.

Classification of Brine Solution:
The Tribunal observed that brine solution, arising during the manufacture of Caustic Soda, is distinct from raw materials like Sodium Carbonate and Sodium Hydroxide. It was determined that brine solution is marketable and subject to a 'nil' rate of duty. The appellants were held liable to pay duty on the brine solution removed to their sister concern due to non-maintenance of separate accounts.

Admissibility of Duty Credit:
The appellants were required to predeposit a specified amount as they lacked a prima facie case on merit or limitation. The appellants argued for restricting the demand to the normal period of one year, citing relevant case laws, but the Revenue opposed, stating non-compliance and suppression of information, justifying the extended limitation period.

Application of Rule 6(3)(b):
The Tribunal found that the appellants did not maintain separate accounts for exempted goods, leading to the application of Rule 6(3)(b) for payment of duty on the exempted brine solution removed to their sister concern.

Limitation Period for Duty Demand:
The Revenue argued for the extended limitation period due to noncompliance and suppression of material information by the appellants, which was supported by the Tribunal's decision to dismiss the appeal.

Prima Facie Case for Reducing Duty Demand Period:
The Tribunal differentiated the present case from a previous case involving Hindustan Coca Cola, emphasizing the absence of similar factors supporting a waiver of predeposit. The Tribunal highlighted the necessity of compliance and the regular audit program of the department.

Disclosure Requirements for Extending Benefit of Notification:
In contrast to the case of Punjab Laminates, where disclosure of ingredients and manufacturing process led to a time-barred demand, the appellants in the present case failed to maintain separate accounts or provide evidence of submitting particulars of removal of exempted goods to the department, resulting in the dismissal of the appeal.

In conclusion, the Tribunal upheld the lower appellate authority's order, finding no grounds for interference based on the facts and circumstances presented during the proceedings.