2006 (5) TMI 33 - AT - Central Excise

Central Excise Cenvat credit Appellants were not maintaining separate accounts for inputs used in manufacture of dutiable and exempted goods 8% amount paid on exempted final product was included in consolidated price shown in invoice 8% amount to be paid on such consolidated invoice price Demand of differential duty upheld

Summary

Issues:
1. Applicability of duty on exempted goods cleared to State-funded Research Institutions.
2. Requirement of maintaining separate accounts for dutiable and exempted goods.
3. Liability to pay 8% of the sale price of exempted goods to the exchequer.
4. Dispute regarding differential amount demanded by the department.

Analysis:

1. The appellants, manufacturers of "non-ferrous metal powders," including Copper, Aluminium, and Nickel powder, cleared goods exempt from duty to State-funded Research Institutions as per Notification No. 10/97-CE. However, they also cleared dutiable goods during the periods in question. As they did not maintain separate accounts for inputs used in manufacturing both types of goods, they were liable to pay 8% of the sale price of exempted goods under Rule 6 (3) (b) of CENVAT Credit Rules, 2002. The appellants paid this amount and collected it from buyers as per invoices.

2. The department demanded an additional 8% on the amount collected by the appellants from the buyers for exempted goods. The dispute arose over the calculation of the amount owed to the government. The appellants contended that they had already paid the required 8% on the sale price of exempted goods, but the department sought the differential amount. The relevant invoice indicated the total amount collected from buyers, including the 8% already paid to the government.

3. The Tribunal upheld the department's demand for the additional 8% on the differential amount, as per the Rule. The appellants failed to provide sufficient evidence or arguments against this demand. Therefore, the Tribunal concluded that the differential amount was recoverable by the department, and the impugned orders were sustained. The appeals were dismissed based on this analysis.

In conclusion, the judgment addressed the issues related to duty payment on exempted goods, the requirement for maintaining separate accounts, and the liability to pay 8% of the sale price of exempted goods. The decision was based on the interpretation of relevant rules and the specific circumstances of the case, ultimately leading to the dismissal of the appeals.