2018 (1) TMI 968 - AT - Central Excise

CENVAT credit - manufacture of dutiable as well as exempt goods - separate records not maintained - Rule 6(3) of the CCR - Held that - The only requirement under the law is maintenance of separate records in respect of inputs used in the manufacture of dutiable as also exempted goods. As per the appellant such records stand maintained by them and produced before the adjudicating authority. This fact requires verification for which purpose the impugned order set aside and matter remanded to the original adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Maintenance of separate records for cenvatable and non-cenvatable inputs.
2. Invocation of Rule 6(3) of the Cenvat Credit Rules.
3. Requirement of storing inputs separately.
4. Use of a common furnace for manufacturing different types of goods.
5. Benefit of limitation in case of demand for a percentage of the value of final exempted goods.

Analysis:
1. The case involved the issue of maintaining separate records for cenvatable and non-cenvatable inputs by the appellant, who was engaged in manufacturing both dutiable and exempted final products. The appellant claimed to have separate records for cenvatable inputs but not for non-cenvatable inputs. The adjudicating authority rejected this claim, citing the lack of separate records for non-cenvatable inputs and the common use of a furnace for both types of goods. However, the Tribunal clarified that Rule 6(1) of the Cenvat Credit Rules only requires separate records for cenvatable inputs, not non-cenvatable inputs. The Tribunal emphasized the need for separate records for inputs used in dutiable and exempted goods, remanding the matter for verification.

2. The Revenue initiated proceedings against the appellant under Rule 6(3) of the Cenvat Credit Rules, seeking confirmation of a percentage of the value of exempted final products due to the common use of inputs for dutiable and exempted goods. The appellant argued that they maintained separate records for cenvatable inputs, hence Rule 6(3) did not apply. The Tribunal found the objection raised by the adjudicating authority invalid, stating that the law only requires separate records for inputs used in dutiable and exempted goods. The Tribunal remanded the matter for further consideration.

3. The issue of storing inputs separately was raised by the adjudicating authority, objecting to the common storage of inputs for dutiable and exempted goods. The Tribunal clarified that there is no legal requirement to store both types of inputs separately, emphasizing the importance of maintaining separate records for inputs used in the manufacture of dutiable and exempted goods.

4. The adjudicating authority objected to the common use of a furnace for manufacturing different types of goods. However, the Tribunal ruled that using a common furnace is not a legal objection as long as separate records for inputs are maintained. The Tribunal emphasized the necessity of separate records for inputs used in dutiable and exempted goods, remanding the matter for verification.

5. Regarding the benefit of limitation in cases of demanding a percentage of the value of final exempted goods, the Revenue's appeal was remanded along with the appellant's appeals for further consideration. The Tribunal directed the adjudicating authority to re-decide the issue in light of relevant decisions, ensuring both parties have the opportunity to present their case effectively. Ultimately, all four appeals were allowed by way of remand, with cross appeals being disposed of accordingly.