2015 (6) TMI 865 - AT - Central Excise

Exemption under Notification No. 04/2006 dated 01.03.2006 - Non maintenance of separate accounts - Interest u/s 11AB - Penalty u/s 11AC - Held that - Appellant have disclosed the clearance of mill scale powder/iron ash clearly in ER-I returns and claimed exemption under Notification No. 04/2006 dated 01.03.2006. There is no suppression of fact established on part of the appellant. It is the duty of department to verify the exemption claimed by the appellant and to determine whether the credit has been reversed or not. In the circumstances, it is held extended period is not attracted. I allow the appeal in part and set aside the penalty under Section 11AC. - Decided in favour of assessee.

Summary

Issues:
- Appeal against Order-in-Appeal No. YDB (67)/Th-I/2012 dated 29.05.2012
- Claim of nil rate of duty under Notification No. 04/2006 dated 01.03.2006 for 'mill scale powder'
- Reversal of duty amount under Rule 6(3) of CENVAT Credit Rules, 2004
- Allegation of suppression of facts and extended period invocation
- Violation of natural justice in passing the impugned order

Analysis:
The appeal was filed against the Order-in-Appeal No. YDB (67)/Th-I/2012 dated 29.05.2012 passed by the Commissioner of Central Excise (Appeals) Mumbai-I. The appellant, engaged in the manufacture of TMT Bars/Round Bars, classified under Chapter Head 26.19 of CETA, 1985, claimed nil rate of duty under Notification No. 04/2006 dated 01.03.2006 for 'mill scale powder'. A show-cause notice was issued to the appellant, alleging that the 'mill scale powder' arising during the manufacturing process was not slag, making the appellant liable to pay Central Excise duty. The appellant was also required to reverse the duty amount under Rule 6(3) of CENVAT Credit Rules, 2004, for not maintaining separate accounts of inputs used in the manufacture of exempted goods. The Order-in-Original confirmed the demand with interest and imposed a penalty under Section 11AC, leading to the appeal before the Tribunal.

The appellant contended that they regularly submitted ER-I monthly returns, clearly stating the description of 'mill scale powder' under Chapter Heading 26.19 with exemption notification, claiming a 'Nil' rate of duty. They argued that there was no suppression of facts on their part, and it was the duty of the department to verify the exemption claimed. The appellant relied on a Tribunal ruling emphasizing the department's responsibility to verify exemptions claimed by the appellant. They further argued that the impugned Order-in-Original contained misleading information and invoked an extended period incorrectly. Additionally, the appellant claimed they were not given adequate opportunities for personal hearings, violating principles of natural justice.

On the other hand, the Revenue relied on the impugned order, stating that the appellant had deviated from the normal practice of paying duty and had concealed facts by not maintaining separate accounts for inputs used in the manufacture of exempted goods. The Tribunal, after hearing both parties, found that the appellant had disclosed the clearance of 'mill scale powder/iron ash' in ER-I returns and claimed exemption under the relevant notification. No suppression of facts was established on the appellant's part, and the duty of verifying exemptions claimed rested with the department. Consequently, the extended period was deemed not applicable, leading to the partial allowance of the appeal and the setting aside of the penalty under Section 11AC. The appellant was granted consequential relief as applicable.