2017 (6) TMI 936 - AT - Central Excise

CENVAT credit - Rule 6(3) of CCR - the respondent is not maintaining separate accounts of inputs of Zinc skimming and Zinc Ash and clearing the Zinc Ash without payment of duty as exempted goods - Held that - verification report is on record which shows that respondent has not taken Cenvat credit on Zinc Ash/ inputs used in Zinc Ash - the respondent is not taken Cenvat credit on inputs used in the manufacture of Zinc Ash. Therefore, the respondent is not required to pay 10% of the value of Zinc Ash cleared by them - appeal dismissed - decided against Revenue.

Summary

Issues:
- Allegation of not maintaining separate accounts for inputs used in manufacturing Zinc Skimming and Zinc Ash
- Requirement to pay 10% of the value of Zinc Ash
- Appeal against demand, interest, and penalty imposed by adjudicating authority
- Verification report showing no Cenvat credit taken on Zinc Ash/inputs
- Upholding of the impugned order against the Revenue's appeal

Analysis:
The case involved the Revenue appealing against an order where the respondent was accused of importing Zinc granules, separating Zinc skimmings and Zinc Ash, and selling the duty-free Zinc Ash without payment of duty. The Revenue alleged that the respondent failed to maintain separate accounts for inputs used in manufacturing Zinc Skimming and Zinc Ash, thus necessitating payment of 10% of the value of Zinc Ash under Rule 6(3). The adjudicating authority had initially confirmed the demand, interest, and penalty, but the Commissioner (Appeals) later set aside the demand after verifying that the respondent did not take Cenvat credit for segregating Zinc Ash.

During the appeal, the Revenue contended that separate accounts should have been maintained, while the respondent's counsel supported the impugned order's findings. The Member (Judicial) considered the verification report on record, which indicated that the respondent did not avail Cenvat credit on Zinc Ash/inputs. This crucial fact, undisputed by the Revenue, led to the conclusion that the respondent was not obligated to pay 10% of the Zinc Ash value. Consequently, the impugned order was upheld, dismissing the Revenue's appeal and affirming that the respondent had not taken Cenvat credit for the inputs used in producing Zinc Ash.