2023 (6) TMI 947 - AT - Central Excise

Classification of goods - lead acid battery - to be classified under CTH 85414011 of the Central Excise Tariff Act, 1985 or under CTH 85078000 of Central Excise Tariff Act, 1985? - Extended period of Limitation - HELD THAT - It is clear that the solar battery is cleared by availing benefit of exemption Notification No.6/06 dated 01.03.2006 and the same is declared in their periodical returns filed with the Department and there is no suppression on the part of the appellant. Moreover, in another proceedings against the appellant by the Revenue, initiated proposing that the appellant is not maintaining separate cenvat credit account for input/input services used for manufacture of dutiable as well as exempted goods. As the Revenue itself was under confusion that the solar battery in question was exempted goods, so, it is held that the extended period of limitation is not invokable. Accordingly, the demand pertaining to extended period of limitation is set aside. It is noted that the appellant has already reversed the cenvat credit on input/input services used for manufacture of solar battery, therefore, the appellant is entitled to take the cenvat credit on input/input services used for manufacture of solar battery during the normal period of limitation and accordingly, the duty is payable by the appellant along with interest. In that circumstances, no penalty is imposable. The matter remanded back to the Adjudicating Authority for computation of demand for the normal period of limitation for allowing CENVAT credit on input/input services used for manufacture of solar battery during the normal period of limitation along with interest - appeal allowed by way of remand.

Issues:
The issues involved in the judgment are the eligibility of the appellant for exemption under Notification No.6/06 dated 01.03.2006 for the clearance of solar batteries, the classification of solar batteries under CTH 85414011, the demand of duty, interest, and penalty on the appellant for the period September 2004 to August 2009, and the maintenance of separate cenvat credit account for input/input services used in the manufacture of dutiable and exempted goods.

Eligibility for Exemption under Notification No.6/06:
The appellant, a manufacturer of lead acid batteries, was under the belief that they were entitled to the benefit of exemption under Notification No.6/06 dated 01.03.2006 for the clearance of solar batteries. The appellant argued that they regularly declared their periodical returns and disclosed the relevant facts, hence the extended period of limitation should not be invoked due to lack of suppression of facts. The Revenue alleged that the appellant did not maintain a separate account for input/input services used in the manufacture of dutiable and exempted products. The Tribunal found that the solar batteries were cleared by availing the benefit of the exemption notification, declared in their returns without suppression, and held that the extended period of limitation was not applicable in this case.

Classification and Demand of Duty:
The audit revealed that the appellant categorized their manufacturing products into two segments, with solar batteries being cleared without payment of duty under the exemption notification. The Revenue initiated proceedings against the appellant for the demand of duty, interest, and proposed penalty for the period September 2004 to August 2009. The Tribunal confirmed the demand of duty but set aside the demand pertaining to the extended period of limitation, as the Revenue itself was confused about the classification of the solar batteries as exempted goods.

Maintenance of Separate Cenvat Credit Account:
The Revenue alleged that the appellant did not maintain a separate cenvat credit account for input/input services used in the manufacture of dutiable and exempted goods. However, the Tribunal noted that the appellant had already reversed the cenvat credit on input/input services used for manufacturing solar batteries. Consequently, the Tribunal held that the appellant was entitled to take the cenvat credit on input/input services used for the manufacture of solar batteries during the normal period of limitation, and no penalty was imposable. The matter was remanded back to the Adjudicating Authority for the computation of demand for the normal period of limitation for allowing cenvat credit on input/input services used for the manufacture of solar batteries along with interest.

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