2009 (6) TMI 359 - AT - Central Excise

Demands under Rule 6 of the CENVAT Credit Rules, 2001 are confirmed on the ground that the appellants are taking credit in respect of common inputs used in the manufacture of dutiable goods as well as exempted goods - we find that the appellants were not taking credit in respect of the inputs used in the manufacture of exempted goods. As per records, the credit was availed only in respect of the inputs which are used in the manufacture of goods on which duty is being paid. The appellants produced copies of all the invoices on which credit has not been availed and the inputs received under these invoices are used in the manufacture of the exempted goods. The records are maintained, which shows separate inventories of the inputs which are used in the manufacture of exempted goods and no credit is availed in respect of inputs used in the manufacture of exempted goods - In view of the above discussions, the impugned Orders demanding 8% of price of exempted goods are set aside and the appeals are allowed.

Summary

Issues:
Appeal against demands under Rule 6 of the CENVAT Credit Rules, 2001 for common inputs used in manufacturing exempted and dutiable goods.

Analysis:
The appellants contested demands under Rule 6 of the CENVAT Credit Rules, 2001, confirming that they are taking credit for common inputs used in manufacturing wagons exempted from duty and those on which duty is paid. The appellants argued that they maintained separate records for inputs used in both types of wagons, not availing credit for inputs used in exempted wagons. They cited invoices and separate records to support their claim. The Adjudicating Authority upheld demands due to the absence of separate manufacturing facilities and time-frames for wagons. However, the appellants argued that they complied with Rule 6 by maintaining separate Bin Cards with distinct code numbers for inputs used in both types of wagons, supported by a Chartered Accountants' Certificate.

The Revenue, represented by the Jt. C.D.R., contended that verification of input credit availed was hindered by the lack of cross-references to invoice numbers in the Bin Cards and absence of identification marks linking input documents and Bin Cards. They argued that the CA's certificate did not address this issue, justifying the demands made.

The Tribunal examined Rule 6 of the CENVAT Credit Rules, emphasizing the requirement for manufacturers dealing with exempted and dutiable goods using common inputs to maintain separate records for inputs used in exempted goods. Upon review, it was found that the appellants did not claim credit for inputs used in exempted goods, only for dutiable goods. The appellants provided evidence of invoices where credit was not availed for inputs used in exempted goods, supported by separate inventories for such inputs. Consequently, the Tribunal set aside the impugned Orders, allowing the appeals in favor of the appellants.

This judgment highlights the importance of adhering to Rule 6 of the CENVAT Credit Rules by maintaining separate records for inputs used in exempted and dutiable goods to avoid liability for availed credit on common inputs. The case underscores the significance of proper documentation and record-keeping to demonstrate compliance with tax regulations and refute erroneous demands.