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2015 (10) TMI 1918 - AT - Central ExciseCENVAT Credit - non maintenance of separate accounts of raw materials used for dutiable and exempted finished goods - clearance of the exempted finished goods - Held that - There is no finding of the lower authorities that they have reversed the credit used on the exempted finished goods as contended by the appellants . We find that, in view of the retrospective amendment of Rule 6 (3) (b) of Cenvat Credit Rules by Finance Act, 2010, the appellants were entitled to reverse the proportionate Cenvat credit attributable to the quantum of input used in or in relation to manufacture of exempted final product. - Revenue raised the minor discrepancies on the reversal of the credit with the statement submitted by the appellant. In our considered view, the Adjudicating Authority should examine the reversal of credit. - Decided in favour of assessee.
Issues:
1. Failure to maintain separate accounts for dutiable and exempted finished goods. 2. Alleged non-compliance with Rule 6(3)(b) of Cenvat Credit Rules, 2004. 3. Demand of recovery amount and penalty imposed. 4. Appeal rejection by Commissioner (Appeals). 5. Applicability of retrospective amendment of Rule 6(3)(b) by Finance Act, 2010. 6. Verification of reversal of credit by the Adjudicating Authority. Issue 1: Failure to maintain separate accounts The appellants were engaged in manufacturing Pipe Fittings under Chapter 7307.2300 of the Central Excise Tariff Act, 1985. They were accused of not maintaining separate accounts for raw materials used in dutiable and exempted finished goods, violating Rule 6(3)(b) of Cenvat Credit Rules, 2004. Issue 2: Alleged non-compliance with Rule 6(3)(b) A Show Cause Notice was issued to recover an amount due to the alleged non-compliance with Rule 6(3)(b) of the Cenvat Credit Rules, 2001/2004. The Adjudicating Authority confirmed the demand, imposed penalties, and the Commissioner (Appeals) rejected the appeal. Issue 3: Demand of recovery amount and penalty The demand for recovery of a specific amount, along with interest and penalties, was confirmed by the Adjudicating Authority, leading to the rejection of the appeal by the Commissioner (Appeals). Issue 4: Appeal rejection by Commissioner (Appeals) The appeal filed by the appellant was rejected by the Commissioner (Appeals), upholding the decision of the Adjudicating Authority regarding the demand for recovery and penalties. Issue 5: Applicability of retrospective amendment The Tribunal analyzed the retrospective amendment of Rule 6(3)(b) by the Finance Act, 2010, which allowed manufacturers to reverse the proportionate Cenvat credit attributable to inputs used in manufacturing exempted final products. Previous decisions were cited to support this interpretation. Issue 6: Verification of reversal of credit The Tribunal directed the Adjudicating Authority to examine the reversal of credit to ensure compliance with the law. The appeal was allowed, subject to the verification of the credit reversal process. In conclusion, the judgment addressed various issues related to the failure to maintain separate accounts, alleged non-compliance with Cenvat Credit Rules, demand for recovery amount and penalties, appeal rejection, the retrospective amendment of Rule 6(3)(b), and the verification of credit reversal. The decision allowed the appeal, emphasizing the importance of complying with the amended rules and directed further examination by the Adjudicating Authority.
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