2017 (2) TMI 980 - AT - Central Excise

Reversal of CENVAT credit - Rule 6(2) of CCR, 2004 - manufacture of dutiable as well as exempted product - maintenance of separate records in respect of receipt, Consumption and inventory of Furnace oil used in the manufacture of dutiable final products and exempted final products i.e. Maaza as per Rule 6(2) of the CCR, 2004 - whether u/r 6(3)(b) of the Credit Rules, the respondent is required to pay 10% of the total price of the exempted goods clear by them? - Held that - the issue is no longer res integra and is decided in the assessee s own case 2016 (11) TMI 775 - CESTAT CHANDIGARH , where the reliance placed on the decision of Cadila Healthcare Ltd. 2009 (8) TMI 892 - CESTAT AHMEDABAD where it was held that no credit stand taken in respect of that part of dutiable furnace oil which has been used in the manufacture of exempted products. The demand at the rate of 10% of value of such exempted products is not called for - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Duty payment on exempted products due to lack of separate inventory maintenance.

Analysis:
The appeal was filed by the revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Chandigarh. The core issue revolved around the manufacturing of both dutiable Aerated water products and exempted fruit pulp product, Maaza. The department contended that since the manufacturer did not maintain separate accounts of inputs, specifically furnace oil, used in the production of both types of products, duty should be levied at a rate of 10% on the value of exempted products. The Assistant Commissioner had directed the payment of duty at the said rate, leading the party to appeal before the Ld. Commissioner (Appeals), who ruled in favor of the respondents. The department, aggrieved by this decision, filed the current appeal.

One of the grounds of the department's appeal was that the decision of the Ld. Commissioner (Appeals) was based on an Order-in-Original (O-I-O) from the Commissioner, Central Excise Ludhiana, which was under appeal with the Hon'ble CESTAT, New Delhi. The respondent's counsel highlighted that appeals related to a similar O-I-O dated 15.10.2007 had been set aside by the Tribunal in a previous decision. The counsel also referenced a recent Division Bench decision in favor of the respondents in a case with identical facts.

The Tribunal's decision was based on the contention that the respondent was not availing Cenvat credit on the furnace oil used in the manufacture of the exempted final product, Maaza, as per their calculated formula. The Tribunal observed that the revenue did not provide tangible evidence to the contrary. The Ld. Commissioner (Appeals) had also noted that the respondent was not availing the credit on furnace oil used in the exempted product's manufacture as per the formula. Citing previous tribunal decisions, the Tribunal agreed with the respondent's contention that since no credit was taken for the furnace oil used in the exempted products, there was no justification for demanding 10% of the exempted product's value due to the lack of separate accounts maintenance.

Given the precedents and the findings of the original adjudicating authority, the Tribunal set aside the impugned order and allowed the appeal with consequential relief to the appellant. The Tribunal held that the demand was not sustainable against the respondent, and the proceedings were dropped. Therefore, the impugned order was upheld, and the appeal filed by the revenue was dismissed. The issue was deemed no longer res integra based on previous tribunal decisions, resulting in the dismissal of the revenue's appeal.