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2012 (12) TMI 507 - AT - Central ExciseWhether the credit on duty paid on inputs end shields and stator housings is available to the assessee as these inputs were exclusively used in the manufacture of exempted final products particularly when the assessee has paid 8%/10% of the price of the exempted final products to the department Held that - Submission of the assessee that the generators of 1000 KV and 1250 KV have been cleared by them reversing the credit equal to the amount of 8%/10% of price of exempted goods during the relevant period. It is their contention that the said reversal is in excess of total CENVAT Credit taken by them on all inputs used in the manufacture of exempted goods. To prove this fact, they have submitted a certificate from the Cost Accountant - Commissioner has not given any finding on this submission of the assessee matter remanded back to the Commissioner
Issues Involved:
1. Admissibility of CENVAT Credit on inputs "end shields" and "stator housings" used in the manufacture of exempted windmill generators. 2. Validity of the demand notices and the time-barred nature of the demand. 3. The effect of the reversal of 8%/10% of the sale price of exempted goods on the demand for CENVAT Credit. 4. Consideration of exports under bond and their impact on the eligibility for CENVAT Credit. 5. Imposition of penalty and interest. Detailed Analysis: 1. Admissibility of CENVAT Credit The primary issue is whether the CENVAT Credit on inputs "end shields" and "stator housings" is available to the assessee when these inputs are used exclusively in the manufacture of exempted windmill generators. The assessee contended that these inputs are used in both dutiable and exempted goods, thus credit should be allowed. The Commissioner initially confirmed the demand but later dropped it after verifying that the inputs were used in the manufacture of dutiable goods starting from May 2006. However, the Tribunal found the verification report unclear and directed the Commissioner to ascertain the actual date of use of these inputs in dutiable goods by examining the raw materials/inputs records. 2. Validity of the Demand Notices The assessee argued that the demand notice dated 29.3.2006 is time-barred under Section 11A of the Central Excise Act, as it was issued beyond the one-year period. The Tribunal did not provide a final ruling on this issue but remanded it back to the Commissioner for further verification and adjudication. 3. Reversal of 8%/10% of Sale Price The assessee claimed that they reversed 8%/10% of the sale price of exempted goods, which was more than the total CENVAT Credit taken on the inputs used. They submitted a Cost Accountant's certificate to support this claim. The Tribunal noted that the Commissioner did not address this submission and directed him to verify the claim. If the amount reversed is indeed more than the credit taken, the demand would not be justified. 4. Exports Under Bond The assessee exported generators of 1000 KV and 1250 KV under bond, which under Central Excise law allows them to take credit on inputs used in the manufacture of exempted goods. The Tribunal directed the Commissioner to quantify the amount of duty involved on inputs used in the manufacture of export goods and exclude it from the demand. 5. Imposition of Penalty and Interest The Revenue appealed against the non-imposition of equivalent penalty. The Tribunal noted that the penalty under Rule 15 of the Cenvat Credit Rules and Section 11AC should be considered if suppression is proven. The imposition of penalty will depend on the re-quantified demand after the Commissioner completes the verification process. Conclusion The Tribunal set aside the Commissioner's order and remanded the case back for fresh adjudication. The Commissioner is to verify the actual use of inputs in dutiable goods, the time-barred nature of the demand, the reversal of 8%/10% of the sale price, and the exclusion of duty on exported goods. The imposition of penalty will depend on the re-quantified demand. Both parties are allowed to present additional case laws in support of their contentions.
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