2018 (5) TMI 538 - AT - Central Excise

CENVAT credit - demand of 5%/10% of the value of the exempted final products cleared from the factory premises - Rule 6(3) of CENVAT Credit Rules, 2004 - Held that - The Adjudicating Authority has specifically recorded that the exempted goods were cleared to 100% EOU and also that no credit was availed on the inputs which are used for manufacturing of leaflets - the above findings are correct and are inconsonance with the law as settled by the various decisions and more so by the Hon ble High Court of Bombay in the case of Repro India Ltd. 2007 (12) TMI 209 - BOMBAY HIGH COURT - appeal dismissed - decided against Revenue.

Summary

Issues:
Demand of an amount equivalent to 5%/10% of the value of exempted goods cleared under Rule 6(3) of CENVAT Credit Rules, 2004.

Analysis:
The appeal was filed by the Revenue against Order-in-Original No. 06/2011 regarding the demand of an amount equivalent to 5%/10% of the value of exempted goods cleared under Rule 6(3) of CENVAT Credit Rules, 2004 for the period June, 2005 to November, 2009. The Adjudicating Authority dropped the proceedings initiated as part of the amount was confirmed to be a liability, but the majority was not confirmed as the respondent had not availed CENVAT credit on finished goods cleared without duty payment. The Revenue contested this decision. The Adjudicating Authority correctly dropped the proceedings against the respondent as no credit was availed on inputs used for manufacturing exempted goods, and the exempted goods were cleared to 100% EOU. The Authority cited Rule 6(1) and (2) of CENVAT Credit Rules, 2004, emphasizing the need for separate accounts for dutiable and exempted goods. The findings were supported by the law and a previous decision by the Hon'ble High Court of Bombay.

The Departmental Representative argued that the respondent, engaged in manufacturing exempted goods, should have maintained separate accounts or paid 5%/10% of the value of exempted goods cleared. However, the Adjudicating Authority found that no CENVAT credit was availed on inputs used for manufacturing leaflets, and clearances to 100% EOUs were exempt from the provisions of Rule 6(1) to (3) as per Rule 6(6)(ii) of CENVAT Credit Rules, 2004. The Adjudicating Authority's decision was upheld as correct and in line with established law and precedents.

In conclusion, the Tribunal concurred with the Adjudicating Authority's decision and rejected the Revenue's appeal. The findings were supported by legal provisions and previous court decisions. The appeal was dismissed, and the impugned order was upheld.