2011 (1) TMI 1015 - AT - Central Excise

Duty demand, interest and penalty of equal amount - the appellant was engaged in the manufacture of dutiable as well as exempted products out of common inputs and was availing CENVAT credit for the entire inputs used in the manufacture of both the products without following the procedure as laid down under Rule 6(2) of CENVAT Credit Rules, 2004 as appellant did not pay an amount equal to 10% of the total price excluding sales tax and other taxes paid on such goods as prescribed under Rule 6(3)(b) - Held that - Provisions of Rule 6 of CENVAT Credit Rules has been amended and retrospective effect has been given to the amendment. This amendment was not before the adjudicating authority. Therefore, the case is remanded to the adjudicating authority to decide the issue afresh, after considering the amendment carried out to Rule 6 of CENVAT Credit Rules, 2004, appeal is disposed of by way of remand.

Summary

Issues:
- Appeal against Commissioner (Appeals) Order-in-Appeal upholding duty demand, interest, and penalty
- Availing CENVAT credit without following prescribed procedure for dutiable and exempted products
- Non-payment of 10% amount for exempted products as per Rule 6(3)(b) of CENVAT Credit Rules, 2004
- Amendment to Rule 6 of CENVAT Credit Rules in Finance Bill, 2010 with retrospective effect

Analysis:
The appellant filed an appeal against the Commissioner (Appeals) Order-in-Appeal upholding the duty demand, interest, and penalty imposed by the adjudicating authority. The appellant, engaged in manufacturing 'P&P medicines,' availed CENVAT credit for both dutiable and exempted products without following the prescribed procedure under Rule 6(2) of CENVAT Credit Rules, 2004. The appellant failed to pay an amount equal to 10% of the total price for exempted products as required by Rule 6(3)(b).

Upon perusing the records, it was evident that the appellant did not comply with the rules regarding separate accounts for inputs used in the manufacture of dutiable and exempted products. The appellant's non-compliance with Rule 6(3)(b) led to the initiation of proceedings resulting in the confirmation of duty demand and imposition of a penalty equal to the duty amount. The Commissioner (Appeals) upheld the decision, prompting the appellant to file the present appeal before the Tribunal.

The Tribunal, after considering the submissions and the retrospective amendment to Rule 6 of CENVAT Credit Rules in the Finance Bill, 2010, remanded the case back to the adjudicating authority. The Tribunal directed the adjudicating authority to reconsider the issue in light of the amendment to Rule 6 and make decisions on penalty and interest accordingly. The appellant was to be granted a reasonable opportunity of hearing during the fresh adjudication process.

Therefore, the appeal was disposed of by way of remand, allowing for a reevaluation of the case in light of the amended rules, ensuring a fair opportunity for the appellant to present their case before the adjudicating authority.