2017 (11) TMI 235 - AT - Central Excise

CENVAT credit - manufacture of exempt as well as taxable goods - non-maintenance of separate set of books - whether in terms of Rule 6(3)(b) the assessee is required to deduct 8% from the sale price of the exempted goods for payment of 8% or otherwise? - Held that - the issue involved in the present case has been decided by the Larger Bench in the case of Kriti Industries (I) Ltd. 2017 (5) TMI 603 - CESTAT NEW DELHI (LB) . Accordingly, it was held that for the purpose of payment of 8% the same is not liable to be deducted from the sale price of the exempted goods - demand upheld. Penalty - Held that - there is absolutely no suppression of fact on the part of the appellant. The issue involved is of interpretation and is debatable - appellant was not liable to penalty under Rule 13 of Cenvat Credit Rules, 2004. Appeal allowed in part.

Summary

Issues: Interpretation of Rule 6(3)(b) - Requirement to deduct 8% from sale price of exempted goods for payment of 8%.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai addressed the issue of whether an assessee is obligated to deduct 8% from the sale price of exempted goods for the payment of 8% under Rule 6(3)(b). The appellant argued that a similar issue was decided against them in a previous case, but they had filed an appeal in the High Court, which was pending. The appellant contended that they had informed the department about the deduction of 8% for payment under Rule 6(3)(b) and had disclosed this in their monthly ER-1 return. The appellant maintained that there was no malafide intent as they had paid the 8% after deducting 8% considering it as tax. The appellant relied on a previous case where a penalty was set aside. The revenue representative reiterated the findings of the impugned order. The Tribunal examined the submissions and records and noted that the Larger Bench had already decided a similar issue in the case of Kriti Industries (I) Ltd., ruling that the 8% was not required to be deducted from the sale price of exempted goods for payment purposes. Therefore, the issue was no longer open for debate. The Tribunal rejected the request to keep the matter in abeyance as there was no stay on the order and the issue had been settled by the Larger Bench. Consequently, the demand for cenvat credit was upheld along with interest, but the penalty under Rule 13 was set aside as there was no suppression of facts and the issue was debatable and had been resolved by the Larger Bench. The Tribunal held that the appellant was not liable for the penalty under Rule 13, modifying the impugned order accordingly and partly allowing the appeal.