2017 (3) TMI 1441 - AT - Central Excise

CENVAT credit - manufacture of dutiable as well as exempted goods - Aerated Water and Beverages Syrup i.e. Maaza - non-maintenance of separate set of books - Rule 6(3)(b) of the CCR, 2004 - Held that - the demand of an amount equivalent to 10% of exempted final product is not justified on the sole ground that separate accounts were not maintained - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Failure to maintain separate records for dutiable and exempted products.
2. Application of Rule 6(3)(b) of the Cenvat Credit Rules, 2004.
3. Sustainability of demand against the respondent.

Issue 1: Failure to maintain separate records for dutiable and exempted products
The case involved a respondent engaged in the manufacture of Aerated Water and Beverages Syrup, with the latter being exempted from duty. An audit revealed that the respondent did not maintain separate records for the use of Furnace oil in the manufacturing process of dutiable and exempted final products. This lack of separation led to a show cause notice being issued to the respondent.

Issue 2: Application of Rule 6(3)(b) of the Cenvat Credit Rules, 2004
The dispute centered around Rule 6(3)(b) of the Cenvat Credit Rules, 2004, which required the respondent to pay 10% of the total price of the exempted goods due to the absence of separate records for the use of furnace oil in manufacturing dutiable and exempted products. The Ld. Commissioner, however, ruled in favor of the respondent, stating that since the respondent did not avail the cenvat credit of furnace oil used in the manufacturing of exempted final products, the demand was not sustainable.

Issue 3: Sustainability of demand against the respondent
The Tribunal referred to a previous case involving the same respondent where it was established that the respondent did not avail cenvat credit on furnace oil used in the manufacture of exempted final products. Relying on this precedent and citing relevant case law, the Tribunal concluded that the demand against the respondent was not justified. The Tribunal upheld the decision that no credit was taken for the part of dutiable furnace oil used in the manufacture of exempted products, thereby dismissing the appeal filed by the Revenue.

In conclusion, the Tribunal found that the demand against the respondent was not sustainable due to the lack of evidence showing availing of cenvat credit for exempted products. The decision was based on established case law and the specific circumstances of the case, leading to the dismissal of the Revenue's appeal.