2018 (3) TMI 1106 - AT - Central Excise

CENVAT credit - inputs/input services availed in common for manufacture of dutiable and exempted goods - non-maintenance of separate records - Held that - There is no allegation in the show cause notice that the reversal was less than that attributable to credit used in the manufacture of exempted goods. To render the process of adjudication to be complete, it is necessary that the books of accounts of the appellant be verified to ascertain the availment of CENVAT credit on inputs used in common for exempted and dutiable goods - appeal allowed by way of remand.

Summary

Issues:
Recovery of duty/tax on inputs for manufacture of exempted goods without separate account maintenance.

Analysis:
The proceedings were initiated against the appellant for the recovery of duty/tax on inputs used for the manufacture of exempted products without maintaining a separate account. The appellant was held liable for the amount representing a percentage of the value of exempted products sold between 2008-09 and 2013-14. The Commissioner of Central Excise (Appeals), Nagpur dismissed the appeals of the appellant in the impugned orders. The appellant contended that they had not taken any credit of inputs used for both exempted and dutiable goods. They claimed to have reversed the proportionate share of credit related to input services used for exempted goods, which they had informed the authorities during adjudication and appellate proceedings. The appellant argued that since they had disclosed this information to the jurisdictional tax authorities, the conditions for invoking the extended period did not exist.

The Authorized Representative submitted that the appellant had consistently claimed to maintain separate accounts, which they seemed to not have done. Despite being directed to produce these accounts, the appellant refused to do so. The show cause notice did not allege that the reversal made by the appellant was less than what was attributable to credit used in manufacturing exempted goods. Therefore, to complete the adjudication process, it was deemed necessary to verify the appellant's books of accounts to determine the availment of CENVAT credit on inputs used for both exempted and dutiable goods. Additionally, it was crucial to confirm the claim of reversal of the proportionate amount of CENVAT credit.

The Tribunal set aside the impugned orders and remanded the matter back to the original authority for verification. The original authority was directed to verify the non-availment of CENVAT credit on common inputs and the reversal of CENVAT credit for common services to the extent they were attributable to inputs or input services used in the manufacture of exempted products.