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2023 (12) TMI 39 - AT - Central ExciseReversal of proportionate CENVAT Credit - manufacture of both dutiable goodsas well as exempted goods - non-maintenance of separate records of inputs - HELD THAT - It is not relevant as to how the separate records are maintained rather it is important that the records are maintained in such a way that no credit on constituent inputs is taken which is used in manufacture of exempted goods either by sole use are by common use. There is no such allegation in the show cause notice against the respondent for taking credit on any input which is solely used in exempted goods or used as common input. The notice alleged that though the party maintains separate records but not as required under Rule 6 (2) of the CCR, 2004. This view is not supported by any evidence and there is no prescribed manner in Rule 6 (2) for maintaining separate records.It is also found that the only requirement is that the credit should not be taken on inputs used in exempted goods. If the inventory of exempted goods are separately maintained and no credit is availed on the inputs used therein, this will serve the purpose. The demand of 10% amount under sub-rule 3 of Rule 6 of the CCR, 2004 on the export clearances as detailed in Annexure-A to the notice is contrary to the provisions of sub-rule 6 of Rule 6 of the Cenvat Credit Rules, 2004 as the export clearances are one of the clearances among others to which the provisions under sub- rules (1), (2), (3) (4) of Rule 6 shall not be applicable. The demand of an amount on export clearances is not sustainable in the light of the provisions of sub rule 6 of Rule 6 of the CCR 2004 - There are no infirmity in the impugned order and accordingly, the same is sustained - appeal dismissed.
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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