2012 (11) TMI 34 - AT - Central Excise

Non payment of Duty - clearance of exempted goods without maintenance of separate accounts in respect of inputs used - demand for 8% of the value with interest & Penalty - Held that - As decided in Alpha Drug India Ltd. v. CCE, Chandigarh 1999 (12) TMI 274 - CEGAT, NEW DELHI that the clearance under Chapter X or under bond is not the same thing as clearance of goods wholly exempt or goods chargeable to nil rate of duty. Therefore, the provisions of the Rule 57 C are not applicable - in favour of assessee.

Summary

Issues:
1. Demand for excise duty confirmed under Rule 6(3) of Cenvat Credit Rules, 2004 due to clearances made under CT-2 certificate.
2. Requirement of maintaining separate accounts for inputs used in clearances of specified goods without payment of duty.
3. Applicability of Rule 57 C in the case of clearances under Chapter X procedure.
4. Interpretation of clearances under Chapter X procedure as not equivalent to clearances of wholly exempt or nil rate duty goods.

Analysis:
1. The judgment addresses the confirmation of excise duty demand under Rule 6(3) of Cenvat Credit Rules, 2004, concerning clearances made under CT-2 certificate. The Revenue argued that such clearances amount to exempted goods clearance, necessitating separate accounts for inputs used. Consequently, a demand for 8% of the value was confirmed along with interest and penalty.

2. The appellant contended that clearances under Chapter X procedure should not be considered as clearances of exempted goods, citing precedents supporting this view. Notably, the Tribunal's decision in the case of S.R.F Limited was presented, which was upheld by the Supreme Court. In contrast, the Revenue relied on the case of Gujarat Communication & Electronics Limited to support their stance on maintaining separate accounts.

3. The judge found the decision in the case of Gujarat Communication & Electronics Limited irrelevant to the current matter. The critical issue was whether clearances under Chapter X procedure should be treated similarly to exempted goods clearances. The Tribunal's decision in the case of S.R.F. Limited was pivotal, as it established that such clearances are distinct and do not necessitate maintaining separate accounts for inputs used.

4. Referring to various Tribunal decisions, the judgment emphasized that clearances under Chapter X or under bond are not equivalent to clearances of wholly exempt or nil rate duty goods. Consequently, Rule 57 C was deemed inapplicable. Upholding the settled legal position, the appeal was rejected, aligning with the earlier Tribunal decision upheld by the Supreme Court.

5. Ultimately, in line with the precedent upheld by the Supreme Court, the appeal was allowed with any consequential relief for the appellant. The judgment reinforced the distinction between clearances under Chapter X procedure and clearances of wholly exempt or nil rate duty goods, providing clarity on the applicable legal provisions and precedents.