2003 (11) TMI 189 - AT - Central Excise

Summary

Issues:
Central Excise duty liability on paper manufactured under Notification No. 6/2000-C.E.

Analysis:
The appeals involved a common issue of whether the appellants were liable to pay Central Excise duty on paper manufactured by them under Notification No. 6/2000-C.E. The appellants claimed full exemption from duty under the notification for specified quantities of paper cleared during certain periods. The Commissioner had confirmed the duty demand and imposed penalties, alleging that the appellants had cleared both exempted and dutiable goods without maintaining separate accounts for inputs. The appellants argued that they only manufactured paper, availed no Cenvat credit until clearing exempted goods, and reversed Modvat credit before availing the exemption. The Revenue contended that the findings in the impugned orders were valid.

Upon considering the submissions, the Tribunal noted that the Commissioner had applied Rule 57AD of the Central Excise Rules, which requires separate accounts for inputs if a manufacturer produces both dutiable and exempted goods. However, the Tribunal found no evidence that the appellants were manufacturing products other than paper or simultaneously clearing dutiable and exempted goods. The appellants had also reversed Modvat credit and not availed credit on inputs while clearing exempted goods. As such, the Tribunal held that Rule 57AD did not apply in this case. The subsequent clearance of goods on payment of duty after exhausting the exemption limit did not trigger the application of Rule 57AD. Consequently, the Tribunal set aside the impugned orders and allowed both appeals.