Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2007 (10) TMI AT This

  • Login
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2007 (10) TMI 242 - AT - Central Excise


Issues:
1. Demand of Rs. 31,844/- being 8% of the sale price of exempted final products and penalty under Section 11AC read with Rule 173Q/Rule 25 of the Central Excise No. (2) Rules, 2001.
2. Failure to establish maintenance of separate accounts for common inputs used in dutiable and exempted final products.
3. Submission of maintaining separate storage for inputs used in dutiable and exempted goods.
4. Inability to maintain records due to staff shortage.
5. Compliance with Rule 6 (3) of the Cenvat Credit Rules, 2001 regarding separate accounts for common inputs.

Analysis:

1. The Commissioner (Appeals) upheld the demand of Rs. 31,844/- and penalty under Section 11AC read with Rule 173Q/Rule 25 of the Central Excise No. (2) Rules, 2001, as the appellant failed to prove the maintenance of separate accounts for common inputs used in manufacturing dutiable and exempted final products.

2. The appellant argued before the Tribunal that they stored inputs for dutiable and exempted goods separately, and the demand was unjustified as they had maintained necessary records. However, the Tribunal found that the appellant did not follow the prescribed procedure under Rule 6 (3) of the Cenvat Credit Rules, 2001, and failed to provide evidence to counter the finding that separate accounts were not maintained as required.

3. Despite the appellant's claim of storing inputs separately, the Tribunal noted that invoices were kept for purchase of goods for both streams but separate accounts were not maintained as mandated by the rules. Consequently, the demand of Rs. 31,844/- was deemed lawful under Rule 57AD (2)(b) and 57I of the Central Excise Rules and Rule 6(3)(b) of the Cenvat Credit Rules, 2001.

4. The appellant cited staff shortage as the reason for not maintaining records as required, seeking leniency. However, the Tribunal emphasized that the failure to maintain separate accounts for common inputs led to the upheld demand, emphasizing compliance with the rules over staffing constraints.

5. Regarding the penalty, the Tribunal considered the equal amount penalty too severe and reduced it to Rs. 5000, finding the original penalty excessive. The appeal was disposed of with this modification, emphasizing the importance of maintaining separate accounts for common inputs to avoid such penalties in the future.

 

 

 

 

Quick Updates:Latest Updates