2004 (3) TMI 225 - AT - Central Excise

Summary

Issues:
1. Challenge to duty on clinker and penalty imposition by assessee
2. Challenge to correctness of impugned order by Revenue regarding demand on exempted goods

Analysis:
1. The first issue revolves around the challenge by the assessee against the confirmation of duty on clinker and the imposition of a penalty. The assessee, engaged in cement manufacturing, supplied cement to earthquake-hit areas under an exemption notification. The assessee availed Modvat credit on inputs used in this supply, leading to a show cause notice for credit reversal due to the lack of separate records. The duty on clinkers used by the assessee in manufacturing cement under the exemption notification was confirmed. The Tribunal upheld the duty confirmation, stating that the assessee was liable for duty on the intermediate product, even if used captively before a certain date. The benefit of a notification allowing duty benefit on captive deemed intermediate products was rightly denied, as it could not have retrospective effect.

2. The second issue pertains to the correctness of the impugned order by the Revenue regarding the demand on exempted goods. The Commissioner dropped the recovery of 8% but confirmed duty on clinkers. The Tribunal held that the demand of 8% on the value of cement cleared without duty payment under the exemption notification was correctly raised under Rule 57AD. The assessee's failure to maintain separate records for inputs used in duty-free cement manufacturing led to the requirement of paying 8% of the value of exempted goods. The Tribunal rejected the plea that this amount exceeded the duty exemption on the cleared cement. It emphasized the necessity of maintaining proper records for credit reversal and upheld the penalty imposition on the assessee for not complying with record-keeping requirements.

In conclusion, the Tribunal dismissed the appeal by the assessee challenging duty confirmation and penalty imposition while allowing the Revenue's appeal against the correctness of the impugned order regarding the demand on exempted goods.