2015 (10) TMI 1827 - AT - Central Excise

Exemption Notification No.48/2008-CE dated 2.9.2008 - clearances made for flood victims subject to fulfillment of certain conditions - Non maintenance of separate accounts - Held that - Appellant was not availing the exemption regularly. The exemption in question, which is solely meant for flood victims, was availed in respect of one clearance only. In such a scenario, no assessee would keep separate cenvatable accounts in terms of Rule 6. On being pointed out by the Revenue, the appellant forgone their claim to the exemption notification and paid duty accordingly. Merely because the appellant did not pay the duty at the time of clearance, in my views, should not be adopted as a reason for confirmation of demand in terms of Rule 6(3) of CCR. The only consequence of non-payment of duty at the time of clearance of the goods would be confirmation of interest from that date till the date of payment of duty. Learned counsel agrees to pay such interest. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Availing exemption under Notification No. 48/2008-CE for flood victims.
2. Maintenance of separate input credit records.
3. Liability to pay duty under Rule 6(3) of CENVAT Credit Rules.
4. Imposition of penalty under Rule 15 of CENVAT Credit Rules.
5. Confirmation of interest on duty payment.

Analysis:
1. The appellant, engaged in manufacturing P & P Medicaments, cleared a consignment claiming exemption under Notification No. 48/2008-CE for flood victims, fulfilling all conditions. The Revenue later alleged non-maintenance of separate input credit records, leading to a show-cause notice.

2. The Revenue contended that since the appellant availed the exemption at the time of clearance, they were obligated to pay duty under Rule 6(3) of CENVAT Credit Rules. The appellant, acknowledging the error, paid the duty of Rs. 2,33,277, forsaking the exemption benefit for that clearance.

3. The Judicial Member noted that the appellant irregularly availed the exemption meant for flood victims only once, making separate cenvatable accounts impractical. The appellant, upon realizing the mistake, opted out of the exemption and paid the due duty, disagreeing with the Revenue's insistence on Rule 6(3) application.

4. Consequently, the impugned order confirming the demand under Rule 6 and imposing penalty was set aside. However, the appellant remains liable to pay interest on the duty paid subsequently for clearances under the exemption Notification, as agreed by the appellant's counsel.

5. The judgment concludes by disposing of the appeal, directing the appellant to pay interest on the duty paid post-exemption claim withdrawal, emphasizing the importance of adherence to exemption conditions and proper record-keeping in excise matters.