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2024 (5) TMI 410 - AT - Central ExciseCENVAT Credit - only one tank furnace installed in factory in which dutiable as well as exempted goods were being manufactured - maintaining separate records/ inventory for the inputs/input services - HELD THAT - Similar issue has been considered by the this bench in case of Geeta Glass Works 2018 (1) TMI 968 - CESTAT ALLAHABAD where it was held that ' the objection adopted by the adjudicating authority cannot be accepted inasmuch as the provisions of Rule 6 (1) of the Cenvat Credit Rules requires as assessee to maintain separate account only in respect of cenvatable inputs and there is no requirement for maintenance of such records in respect of non cenvatable inputs. Further, we also note that there is no requirement of storing both types of inputs separately. Similarly, use of a common furnace would also not be a legal objection.' From the above decision and the amendments made in the provisions of Rule 6 (3) permitting proportionate reversal credit in respect of common inputs used for manufacture of both dutiable and exempted goods which have been held to be retrospective, the demand made, by asking the appellant to pay the amounts @ 8% of value of exempted goods cannot be sustained. In any case this will be relevant only if on verification it is found that appellant was not maintaining separate records for common inputs used in manufacture of both dutiable and exempted goods. It has been the case of the appellant that they were maintaining the separate records, and have referred to Annexure 5 in Volume II of the Paper book. These documents as per which the separate records were claimed to have been maintained have to be reconsidered by the original authority and re-determine the issues involved. These documents cannot be brushed aside for the reasons stated in the impugned order. The impugned order is set aside - matter remanded back to original adjudicating authority for de-novo consideration - appeal allowed by way of remand.
Issues Involved:
1. Demand for payment of Rs. 3,03,68,017/-. 2. Recovery of interest u/s 11 AB of the Central Excise Act, 1944. 3. Imposition of penalty under Rule 15 of the CENVAT Credit Rules, 2004. Summary: Issue 1: Demand for Payment of Rs. 3,03,68,017/- The appellant was engaged in the manufacture and clearance of both dutiable and exempted glass products. The department alleged that the appellant failed to maintain separate records for inputs used in the manufacture of dutiable and exempted goods as required by Rule 6 of the Cenvat Credit Rules, 2004. Consequently, a show cause notice was issued demanding Rs. 3,03,68,017/- u/s 6(3)(b) read with Rule 14 of the Cenvat Credit Rules, 2004 for the period July 2005 to March 2010. The appellant argued that they had maintained separate records and referred to a previous favorable decision in a similar case (Naveen Glass Products [Final Order No A/70311/2018-EX (DB) dated 17.01.2018]). The Tribunal noted that the primary issue was whether the appellant maintained separate records for inputs used in exempted and dutiable goods. The Tribunal found that the appellant's claim needed verification and remanded the matter back to the original adjudicating authority for reconsideration. Issue 2: Recovery of Interest u/s 11 AB The department demanded recovery of interest on the amount of Rs. 3,03,68,017/- u/s 11 AB of the Central Excise Act, 1944. The appellant contended that the demand was barred by limitation and that the extended period of limitation u/s 11 A had not been invoked. The Tribunal did not make a specific ruling on the interest recovery but remanded the matter for reconsideration along with the principal demand. Issue 3: Imposition of Penalty under Rule 15 The department imposed a penalty of Rs. 3,03,68,017/- under Rule 15 of the CENVAT Credit Rules, 2004 for contravention of Rule 6(2) and Rule 6(3). The appellant argued that they had maintained separate records and that the demand was not sustainable. The Tribunal, referring to various decisions, noted that if the appellant had indeed reversed proportionate credit along with interest, the situation would be as if no credit was availed. The Tribunal set aside the penalty and remanded the matter for verification of the appellant's claim regarding the maintenance of separate records and reversal of credit. Conclusion: The Tribunal set aside the impugned order and remanded the matter back to the original adjudicating authority for de-novo consideration. The adjudicating authority was directed to verify the appellant's claim of maintaining separate records and to re-determine the issues involved within three months from the date of receipt of the order. The appeal was allowed, and the matter was remanded for fresh adjudication.
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