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2023 (12) TMI 39 - AT - Central Excise


Issues involved:
The issues involved in the judgment are the maintenance of separate records for dutiable and exempted goods, compliance with Rule 6 of the Credit Rules, demand of excise duty, and the applicability of limitations.

Maintenance of Separate Records:
The Respondent, engaged in manufacturing both dutiable and exempted goods, maintained separate records as required by Rule 6 of the Credit Rules. They ensured that credit of duty used in exempted goods was not taken and maintained separate accounts for duty paid and duty-free inputs. The Respondent's defense was based on the fact that they maintained separate records for the manufacture of dutiable and exempted goods, thus complying with Rule 6(3) of the Credit Rules.

Compliance with Rule 6 of the Credit Rules:
The Respondent contended that they correctly availed Cenvat Credit only on inputs used in the manufacture of dutiable goods, as evidenced by the separate records maintained. The department's Show Cause Notice did not specify common inputs for which credit was taken and used in the production of both dutiable and exempted goods. The Respondent argued that the demand against them was correctly dropped by the Ld. Commissioner, citing compliance with Rule 6 of the Credit Rules.

Demand of Excise Duty:
The Appellant-Department challenged the dropping of proceedings against the Respondent and the demand of excise duty amounting to Rs.6,17,16,393. The Appellant argued that the Respondent did not maintain separate accounts for inputs used in the production of dutiable and exempted goods, contravening Rule 6(3) of the Credit Rules. However, the impugned order upheld by the Tribunal found no infirmity in dropping the demand, considering the Respondent's compliance with maintaining separate records and availing credit only for dutiable goods.

Applicability of Limitations:
The Respondent contended that the demand raised for the period from March 2008 to February 2010, based on a statement recorded in 2009, was beyond the one-year time limit and barred by limitation. They argued that they followed the prescribed procedure under Rule 6 of the Credit Rules, and hence, the allegation of fraud or suppression was unsustainable. The Tribunal found that the demand on export clearances was not sustainable under Rule 6 of the Cenvat Credit Rules, 2004, and upheld the impugned order dismissing the appeal filed by the Appellant-Department.

 

 

 

 

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