2016 (3) TMI 944 - AT - Central Excise

Recovery of cenvat credit - Returned goods - non maintenance of separate accounts of receipt and utilization of inputs used in dutiable and exempted final products - Demand of 8% amount on the value of exempted acid oil - Held that - In the impugned order that Sulphuric Acid has been used in the manufacture of Acid Oil from soap stocks. This process is separate and independent of manufacture of refined edible oils. During the manufacture of edible oils, the by-product viz. soap stock emerges. The present demand is for a percentage amount of exempted Acid Oil. The entire credit taken on Sulphuric Acid used in the manufacture of Acid Oil has been reversed by the respondents. We find no reason to interfere with the decision of the Commissioner (Appeals) in this regard. Non maintaining proper accounts in respect of the products received for re-processing, the Commissioner (Appeals) observed that one to one correlation of returned goods as per the entries in the RG-I is not possible in a unit having huge turnover. He observed further that the appellants have entered all the returned goods in the RG-I and taken back the credit of excise duty paid. There is no need to maintain separate records for returned goods. The appropriate duty has been paid when the returned goods were cleared. The ld. Commissioner (Appeals) recorded that the respondents produced copies of RG-I register and the respondent s claim regarding proper accounting appears to be correct. He directed the Lower Authority to examine the evidences produced by the respondents for a fresh decision. We find no infirmity in the findings of the Commissioner (Appeals). - Decided in favour of assessee

Summary

Issues:
1. Demand of 8% amount on exempted goods under Rule 6 of Cenvat Credit Rules, 2002.
2. Improper accounting of reprocessed goods.

Analysis:
1. The appeal by Revenue challenged the order of Commissioner (Appeals-I) regarding the demand of 8% amount on exempted acid oil under Rule 6 of Cenvat Credit Rules, 2002. The Respondents, engaged in the manufacture of refined oils and vanaspati, were accused of not maintaining separate accounts for inputs used in dutiable and exempted final products. The Original Authority confirmed a demand of &8377; 5,49,009/- along with a penalty. On appeal, the Commissioner (Appeals) allowed the respondent's appeal related to the demand of 8% amount on exempted acid oil, stating that the respondents had reversed the entire credit taken for Sulphuric Acid. The Commissioner remanded the issue of improper accounting of reprocessed goods for further verification. The Revenue appealed against this decision, contending that the respondents were still liable to pay the 8% amount on exempted goods as other inputs were used in the manufacturing process.

2. The second issue revolved around the improper accounting of reprocessed goods received by the Respondents. The Commissioner (Appeals) observed that the Respondents had maintained accounts of the returned goods, and the matter required further verification. The Commissioner set aside the penalties imposed by the Original Authority. The Revenue contended that the Respondents failed to prove the proper accounting of reprocessed goods, and the Commissioner (Appeals) erred in setting aside the demand. However, the Tribunal found no fault in the Commissioner's decision, noting that the Respondents had entered all returned goods in the RG-I register and paid appropriate duty when clearing the goods. The Tribunal upheld the Commissioner's findings, dismissing the Revenue's appeal and disposing of the cross objections and the application for condonation of delay.

In conclusion, the Tribunal upheld the Commissioner's decision regarding both issues, finding no merit in the Revenue's appeal. The Respondents were relieved of the demand for the 8% amount on exempted acid oil, and the matter of improper accounting of reprocessed goods was deemed adequately addressed by the Respondents.