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2016 (10) TMI 1196 - AT - Central ExciseClearance of exempted goods - Cefoperazone Sodium Sterile - Reversal of CENVAT credit - common inputs were used for dutiable and exempted goods - non-maintenance of separate records - Rule 6(2) of CENVAT Credit Rules, 2004 - whether the goods cleared under chapter X procedure without payment of duty would fall within the category of exempted goods? Held that - In Aureola Chemicals Ltd V/s. CCE, Indore 2004 (1) TMI 244 - CESTAT, NEW DELHI the Tribunal held that the spent Sulphuric Acid cleared by assessee under Chapter X procedure to various manufacturers of fertilizers against CT-2 certificate without payment of duty are not exempted goods - credit need not be reversed - appeal allowed - decided in favor of appellant.
Issues:
1. Whether the appellant correctly claimed exemption under Notification No. 4/2006-CE dated 01.03.2006 for the cleared goods? 2. Whether the appellant was required to reverse the CENVAT Credit availed on inputs used for manufacturing the exempted goods? 3. Whether the goods cleared under chapter X procedure without payment of duty fall within the category of exempted goods? 4. Whether the appellant maintained separate accounts for dutiable and exempted goods as per Rule 6(2) of CENVAT Credit Rules, 2004? Analysis: 1. The appellant claimed exemption under Notification No. 4/2006-CE dated 01.03.2006 for the cleared goods but did not reverse the CENVAT Credit availed on inputs used for manufacturing these goods. The issue revolved around whether the appellant correctly interpreted the conditions of the notification. The appellant argued that the goods were not exempted as per Rule 2(d) of CENVAT Credit Rules, 2004, and they had mistakenly considered them as exempted. The appellant relied on judgments in CCE, Indore V/s. SRF Ltd. and Hindustan Zinc Ltd. to support their stance. 2. The appellant was required to reverse the CENVAT Credit availed on inputs used for manufacturing the exempted goods. The department contended that the appellant cleared both dutiable and exempted goods using common inputs without maintaining separate accounts as mandated by Rule 6(2) of CENVAT Credit Rules, 2004. The issue was whether the appellant was obligated to reverse the credit due to the common usage of inputs for both types of goods. 3. The goods cleared under chapter X procedure without payment of duty were analyzed to determine if they fell within the category of exempted goods. The judgments in Aureola Chemicals Ltd V/s. CCE, Indore and other cases were referenced to establish that goods cleared under Chapter X Procedure are neither exempted nor chargeable to Nil rate of duty. The tribunal's decisions and legal provisions were crucial in determining the classification of such goods. 4. The issue of maintaining separate accounts for dutiable and exempted goods as per Rule 6(2) of CENVAT Credit Rules, 2004, was examined. The judgments in various cases, including CCE, Indore Vs S.R.F Ltd., and Dharamji Morarji Co Ltd., favored the appellant's position. The requirement to maintain separate accounts and the implications of not doing so were thoroughly discussed, leading to the conclusion that the demand on the appellant was unsustainable. In conclusion, the judgment favored the appellant on all issues, setting aside the impugned order and allowing the appeal with consequential reliefs. The detailed analysis of each issue provided clarity on the legal interpretations and precedents applied in reaching the decision.
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