2016 (6) TMI 1153 - AT - Central Excise

Reversal of CENVAT credit - Rule 6 of the Cenvat Credit Rules - demand on the ground that the appellants have failed to maintain separate accounts - Held that - There is no dispute on the fact that they have not maintained separate accounts for the use of the common input services in dutiable and non-dutiable products - the issue is no more res integra inasmuch as the issue stands decided in favor of the appellant in the case of Aarti Sponge and Power Limited 2014 (11) TMI 1071 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay 10% of the value of exempted products due to the failure to maintain separate accounts for dutiable and non-dutiable products.
2. Whether the iron ore fines obtained during the processing of iron ore can be considered excisable goods.
3. Applicability of Rule 6 of the Cenvat Credit Rules regarding the reversal of 10% of the value of exempted goods when a part of the inputs is contained in waste or refuse.
4. Interpretation of relevant case laws and decisions cited by both parties.
5. Consistency of the Tribunal's decision with previous rulings on similar matters.

Analysis:
1. The appellant, a manufacturer of sponge iron, faced a demand for duty amounting to approximately ?62.62 lakhs for not maintaining separate accounts for dutiable and exempted products. The Commissioner held the appellant liable under Rule 6 of the Cenvat Credit Rules for using common input services in both types of products.
2. The appellant argued that the iron ore fines were process waste and not excisable goods, citing precedents and the applicability of Rule 6 to exempt inputs contained in waste or refuse. The Tribunal noted that previous decisions favored the appellant's stance, distinguishing the case from Rallies India Ltd.
3. The dispute centered on whether the appellant should reverse 10% of the value of exempted goods, with the Tribunal ultimately siding with the appellant based on the recent decision in Aarti Sponge and Power Limited. The appeal was allowed in line with this decision, indicating consistency in the Tribunal's approach to similar cases.
4. The Advocate referenced relevant case laws supporting the appellant's position, while the DR relied on a different decision. The Tribunal found the issue to be settled in favor of the appellant based on the cited precedents and recent rulings, leading to the allowance of the appeal.
5. The Tribunal's decision aligned with previous judgments and upheld the appellant's argument regarding the treatment of iron ore fines and the application of Rule 6 in cases involving waste or refuse. The consistency in approach and reliance on established legal principles ensured a favorable outcome for the appellant in this matter.