2015 (10) TMI 876 - AT - Central Excise

Non maintenance of separate accounts - Contravention of Rule 6(3) of the Cenvat Credit Rules - held that - appellant submitted that the appellant is not manufacturing exempted goods, but the Ayurvedic Medicines are being cleared under Notification No. 1/2011-CE dated 1.3.2011 on payment of concessional/notified rate of duty. That there is no manufacture of exempted goods. Tough this was specifically urged in the appeal filed before the Commissioner (Appeals) it was not considered. Further that concessional rate of duty is availed only when Cenvat Credit has not been availed. The consultant submitted that common inputs or input services were not used as alleged in the Show Cause Notice - it is necessary to set aside the impugned order and remand the matter to the original adjudicating authority - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues: Alleged misuse of common inputs and input services in the manufacture of both dutiable and exempted final products; Failure to maintain separate accounts as required under Rule 6(3) of the Cenvat Credit Rules.

Issue 1: Misuse of common inputs and input services

The appellants, engaged in manufacturing Ayurvedic Medicines, vegetable dry fruits, and Herbal Tea, were alleged to have used common inputs and input services in the production of both dutiable and exempted final products. The Show Cause Notice contended that separate accounts were not maintained as mandated by Rule 6(3) of the Cenvat Credit Rules. During the hearing, the appellant's Consultant argued that the Ayurvedic Medicines were cleared under a specific notification at a concessional rate of duty, emphasizing that no exempted goods were manufactured. It was asserted that the concessional rate was availed only when Cenvat Credit had not been utilized, refuting the claim of using common inputs or input services as stated in the Notice.

Issue 2: Failure to maintain separate accounts

The Consultant highlighted before the Tribunal that the authorities had overlooked crucial factual aspects of the case. The Consultant's submission was supported by the Departmental Representative who agreed that the matter required remand for further consideration. Consequently, the Tribunal concluded that the impugned order was flawed due to the failure to consider the appellant's contentions and the necessity to reassess the case based on the correct factual position. Therefore, the Tribunal set aside the initial order and remanded the matter to the original adjudicating authority for a fresh adjudication, emphasizing the importance of addressing the factual nuances and submissions made by the appellant.

In summary, the judgment by the Appellate Tribunal CESTAT NEW DELHI addressed the issues of alleged misuse of common inputs and input services in the manufacturing process and the failure to maintain separate accounts as required by the Cenvat Credit Rules. The Tribunal found discrepancies in the lower authorities' consideration of the case, leading to the decision to set aside the initial order and remand the matter for a fresh adjudication to ensure a comprehensive assessment based on the correct factual aspects presented by the appellant during the hearing.