2015 (3) TMI 1094 - AT - Central Excise

Reversal of CENVAT Credit - appellant did not follow the Rule 6 for the inputs received before 1.3.2002 but reversed 8% of the value of the exempted products - Held that - In the case of a manufacturer who is manufacturing the dutiable as well as exempted goods, he has an option to keep a separate record for the inputs used in the manufacture of dutiable goods and separate record in respect of the inputs used in the manufacture of exempted goods. In case the manufacturer is not maintaining separate accounts, the situation is covered by Rule 6(3). Before 1.3.2002, the manufacturer was required to pay an amount equal to 8% of the total price including sales tax and other taxes, if any, paid on such goods. On 1.3.2002 vide clause (a), certain goods have been excluded from the benefit of scheme of 8%. It is not under dispute that the goods falling under Heading 22.04 were produced by the appellant and were excluded from the said scheme. Thus, from 1.3.2002 onwards, the manufacturer was required to pay an amount equivalent to the cenvat credit attributable to the inputs used in or in relation to the manufacture of such final products at the time of clearance from the factory. Availing the credit when the inputs are received is one action. The liability to pay an amount in respect of the exempted goods has nothing to do with the date of taking the credit. On the contrary, it is the date of clearance of the final products - all these claims have been made for the first time at the Tribunal stage. These claims were never made before the original authority or the first appellate authority. However, in the interest of justice, we allow the said miscellaneous application. However, the matter is remanded back to the original authority to examine these claims of the appellant. - Appeal disposed of.

Summary

Issues:
1. Interpretation of Cenvat Credit Rules, 2002 regarding payment obligations for manufacturers of dutiable and exempted goods.
2. Applicability of Rule 6(3) in the case of a manufacturer not maintaining separate accounts.
3. Consideration of claims regarding goods cleared for export under bond or used for captive consumption.

Analysis:
1. The case involved the appellant, engaged in manufacturing various products, including sugar and alcohol, who used molasses both captively and from other manufacturers. The dispute arose from the appellant's non-compliance with the amended Cenvat Credit Rules in 2002, specifically Rule 6, which required payment for exempted final products. The appellant argued they followed the law prevailing at that time, citing relevant case laws. The respondent contended that the obligation to pay arose at the time of clearance of final products, irrespective of input receipt dates.

2. Rule 6(3) of the Cenvat Credit Rules was crucial in determining the manufacturer's payment obligations for exempted goods. The rule provided options for manufacturers not maintaining separate accounts, specifying payment conditions based on the nature of exempted goods. The Tribunal clarified that post the 2002 amendment, manufacturers had to pay an amount equal to the cenvat credit attributable to inputs used in exempted final products at clearance. The date of input receipt was deemed irrelevant, emphasizing the date of final product clearance for payment determination.

3. The appellant raised additional claims regarding goods cleared for export under bond or used for captive consumption, along with computation errors. These claims were presented for the first time at the Tribunal stage, prompting a remand to the original authority for examination. Despite the belated nature of these claims, the Tribunal allowed the miscellaneous application in the interest of justice, directing the original authority to review the claims with proper documentation within a specified timeline.

In conclusion, the Tribunal upheld the payment obligations under Rule 6(3) for manufacturers of dutiable and exempted goods, emphasizing the date of final product clearance for payment determination. The case highlighted the importance of timely claim submissions and adherence to procedural requirements, with the Tribunal remanding the matter for further examination of additional claims.