2012 (12) TMI 297 - AT - Central Excise

Demand manufacture of cotton and polyester spun yarn - no Cenvat credit of excise duty paid on polyester fibres has been taken - Cenvat credit has admittedly been taken on packing materials for packing of yarn for export, the services of foreign commission agents and GTA services from the factory to the port and according to the appellant, this Cenvat credit has been taken only in respect of the goods which after payment of duty has been exported out of India Held that - According to the department, the appellant had also availed Cenvat credit in respect of the dyes and chemicals, which have been used in the manufacture of dutiable final products as well as waste - appellant on the other hand, deny having used any such duty paid dies or chemicals and having availed Cenvat credit - matter remanded for de novo adjudication

Summary

Issues:
1. Dispute over availing Cenvat credit on inputs.
2. Application of Rule 6(3) of the Cenvat Credit Rules, 2004.
3. Commissioner's order confirming demand, interest, and penalty.
4. Appeal against the Commissioner's order.

Analysis:

1. The appellants, manufacturers of various yarns, availed Cenvat credit but did not avail credit on Polyester Fibre. The dispute arose as the department alleged common credit usage for dutiable and exempted products. The show cause notice demanded recovery, interest, and penalty based on Rule 6(3) of the Cenvat Credit Rules, 2004. The Commissioner upheld the demand, leading to the appeal.

2. The Commissioner's order was challenged on the grounds that no credit was taken on Polyester Fibre, and credits were used only for specific purposes related to exported goods. The appellant argued against the application of Rule 6(3) for waste clearance. The department claimed credit was used for dyes and chemicals, which the appellant denied. The Tribunal noted discrepancies and remanded the matter for further adjudication to ascertain the credit usage on dyes and chemicals.

3. The Tribunal observed that no credit was taken on Polyester Fibre and acknowledged the specific credit usage for exported goods. The demand under Rule 6(3) for waste clearance was disputed due to the alleged usage of dyes and chemicals. The Tribunal set aside the Commissioner's order and remanded the case for a fresh adjudication based on the directions provided.

4. The Tribunal's decision to remand the case for further examination of credit usage on dyes and chemicals indicates a need for a detailed assessment before confirming the demand under Rule 6(3). The matter was sent back to the Commissioner for a fresh adjudication based on the Tribunal's directions, emphasizing the importance of accurate credit utilization records in excise duty disputes.