2011 (5) TMI 771 - AT - Central Excise

CENVAT credit - X-Ray machine Parts are fully exempt from duty under exemption Notification No. 6/2003 dated 28.02.2003 - allegation of the department is that during the period of dispute, the appellant had used common inputs in or in relation to the manufacture of the dutiable as well as exempted final products but did not maintain separate accounts of the inputs used in the manufacture of dutiable final products and exempted final products - main plea of the appellant is that they have not taken CENVAT credit in respect of inputs meant for X Ray machine parts and they have maintained separate records in respect of receipt of the same Held that - plea was not considered by the Commissioner (Appeals), the Commissioner (Appeals) s order is a non-speaking order, the same is set aside. The matter is remanded to the original adjudicating authority for denovo adjudication, appeal disposed of

Issues:
1. Whether the appellant is liable to pay/reverse credit for using common inputs in the manufacture of dutiable and exempted final products.
2. Whether the appellant maintained separate records of inputs used in the manufacture of exempted goods.
3. Whether the Commissioner (Appeals) erred in not considering the appellant's plea regarding non-availment of CENVAT credit for inputs meant for exempted final products.
4. Whether the Commissioner (Appeals) provided a sufficient explanation for his decision.

Issue 1:
The main issue in this case was whether the appellant was liable to pay or reverse credit for using common inputs in the manufacture of dutiable and exempted final products. The appellant argued that they did not take CENVAT credit for inputs used in X-Ray machine parts and maintained separate records. The department contended that the appellant failed to prove the separate storage of inputs for dutiable and exempted products, leading to the demand for payment under Rule 6(3)(b) of the CENVAT Credit Rules, 2004. The Tribunal found that the Commissioner (Appeals) did not adequately address the appellant's contention and remanded the matter for fresh adjudication.

Issue 2:
Another crucial issue was whether the appellant maintained separate records of inputs used in the manufacture of exempted goods. The appellant claimed to have kept distinct records for X-Ray machine parts inputs and not availed CENVAT credit for them. However, the Commissioner (Appeals) did not provide a detailed analysis of this claim, leading to the Tribunal setting aside the order and remanding the case for further examination by the original adjudicating authority.

Issue 3:
The appellant argued that the Commissioner (Appeals) failed to consider their plea regarding the non-availment of CENVAT credit for inputs meant for exempted final products. The Tribunal noted that the Commissioner (Appeals) merely reiterated the findings of the original adjudicating authority without offering independent reasoning. Consequently, the Tribunal set aside the Commissioner (Appeals)'s order and directed a fresh adjudication to address the appellant's contentions adequately.

Issue 4:
The final issue pertained to the sufficiency of the explanation provided by the Commissioner (Appeals) for his decision. The Tribunal observed that the Commissioner (Appeals) did not provide a reasoned analysis of the appellant's claim regarding the separate records of inputs for exempted goods. As a result, the Tribunal overturned the order and remanded the case to the original adjudicating authority for a comprehensive review, emphasizing the importance of considering the appellant's submissions in detail.

Overall, the Tribunal found merit in the appellant's arguments regarding the non-availment of CENVAT credit for inputs used in exempted final products and the maintenance of separate records. The case was remanded for a fresh adjudication to address these crucial aspects adequately and provide a reasoned decision based on a thorough examination of the evidence presented.

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