2018 (10) TMI 955 - AT - Central Excise

CENVAT Credit - common inputs/input services which were used in the manufacture of dutiable as well as exempted final products - non-maintenance of separate records - demand of 8% of the value of exempted goods in terms of Rule 57CC(1) of the erstwhile Cenvat Excise Rules, 1944 - Held that - As the appellant has contended that they are maintained separate records of inputs used in the manufacture of Chloroquin Phosphate Tablet and records are with the department. These records have been lost by the department itself, in that circumstances, the benefit of doubt, the goods in favour of the assessee-appellant that they were maintaining separate records. As the records maintained by the assessee-appellant were not available with the department, therefore, by giving the benefit of doubt, it is held that the appellant were maintaining separate records during the impugned period. Therefore, the appellant cannot be asked to pay @8% of the value of the exempted goods. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against demand of duty and penalty imposition due to alleged non-declaration of Chloroquin Phosphate Tablets by appellant in the classification list and failure to maintain separate records of inputs used in manufacturing.

Analysis:
1. Demand of Duty:
The appellant, engaged in manufacturing generic medicaments exempt from duty, faced a demand for 8% of the value of Chloroquin Phosphate Tablets cleared without duty payment. The appellant contended not availing Cenvat credit on specific inputs used, thus challenging the demand. The appellate tribunal noted the absence of evidence supporting the allegation of availing credit, leading to setting aside the demand.

2. Penalty Imposition:
The Revenue alleged the appellant availed Cenvat credit on certain inputs without evidence to the contrary, justifying the demand and penalty imposition. However, the appellant's submission of maintaining separate records under Rule 57CC(1) raised doubt due to missing records held by the department. Given the department's failure to produce the records and the minimal credit amount involved, the tribunal favored the appellant, dismissing the penalty imposition.

3. Maintaining Separate Records:
The appellant's claim of maintaining separate records of inputs used in manufacturing Chloroquin Phosphate Tablets was initially doubted due to missing records. Despite the department's loss of records, the tribunal granted the benefit of doubt to the appellant, concluding that separate records were indeed maintained. This crucial finding influenced the decision to set aside the demand and dismiss the penalty.

4. Judgment Outcome:
The tribunal set aside the impugned order confirming the demand, thereby allowing the appellant's appeal. Consequently, as the impugned order was overturned, the Revenue's appeal was deemed not maintainable and was dismissed. The judgment highlighted the importance of maintaining accurate records and the burden of proof in tax disputes, ultimately ruling in favor of the appellant based on the lack of concrete evidence against them.