2015 (10) TMI 1652 - AT - Central Excise

Denial of CENVAT Credit - benefit of exemption notification No 29/2004-CE dtd 29.7.2004 - Held that - there was unutilised credit balance of ₹ 1,29,70,128/-, which should be maintained separately. It was found that subsequently in some cases the assessee utilized cenvat credit of ₹ 99,929/- out of the said amount for payment of duty on finished goods. The allegation is mainly based on that the appellant would not maintained record separately. The appellant took a stand that they have maintained record separately for the exempted duty and finished products. - Commissioner (Appeals) observed that neither the show cause notice nor the adjudicating authority has clearly mentioned the facts regarding the maintenance of separate records by the appellants. The appellant in the grounds of appeal stated before the Commissioner (Appeals) they have maintained records separately against the exempted as well as dutiable finished goods. This fact was not seriously disputed by the Commissioner (Appeals). - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues: Denial of Cenvat Credit, Maintenance of Separate Records

Denial of Cenvat Credit:
The appellants, engaged in manufacturing Crimped Polyester Texturised Yarn/Gray Fabrics, faced a dispute concerning the denial of Cenvat Credit amounting to Rs. 99,929/- along with interest and penalty for a specific period. The issue arose from the allegation that the appellants availed the benefit of exemption notifications for Gray Fabrics and Texturised Yarn, leading to a claim that there was an unutilized credit balance of Rs. 1,29,70,128/- that should have been maintained separately. The show cause notice highlighted the utilization of Cenvat Credit for payment of duty on finished goods from this unutilized amount, emphasizing the necessity of maintaining separate records for exempted duty and finished products.

Maintenance of Separate Records:
Upon examining the impugned order, it was observed that the Commissioner (Appeals) noted the absence of clear facts regarding the maintenance of separate records by the appellants. The appellants contended before the Commissioner (Appeals) that they indeed maintained records separately for exempted and dutiable finished goods, a fact not significantly disputed by the Commissioner (Appeals). Consequently, the demand for Rs. 99,920/- along with interest and penalty was deemed unjustified, leading to the setting aside of the impugned order and allowing the appeal in favor of the appellants. The judgment emphasized the importance of maintaining distinct records to accurately reflect transactions involving exempted and dutiable goods.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues of denial of Cenvat Credit and the maintenance of separate records diligently, ultimately ruling in favor of the appellants due to the lack of substantial evidence supporting the denial of credit and acknowledging the appellants' claim of maintaining separate records for exempted and dutiable goods.