2018 (5) TMI 862 - AT - Central Excise

CENVAT credit - taxable as well as exempt goods - non-maintenance of separate records - Held that - the provisions of Rule 6(2) would apply only when dutiable and exempted finished goods are manufactured with the same inputs, while in the case in hand, the goods Sulphuric Acid is not exempted goods at all when they were manufactured, but when they are cleared, they were cleared under Chapter X of Central Excise (Removable of Goods at Concessional Rate of Duty) - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
- Reversal of an amount equivalent to 6% of the value of goods cleared as exempted.
- Applicability of Rule 6(2) of CENVAT Credit Rules.
- Interpretation of Central Excise Tariff under Chapter X procedure.

Analysis:
1. The appeal was filed by Revenue against an Order-in-Appeal regarding the reversal of an amount equivalent to 6% of the value of goods cleared as exempted. The Revenue contended that the goods, specifically sulphuric acid, were cleared without payment of duty, and Rule 6(2) of CENVAT Credit Rules should apply, necessitating the payment of 6% of the value of the exempted goods. Penalties were imposed, and an appeal was made to the first appellate authority, which set aside the Order-in-Original based on a previous order of the Bench in the assessee's own case.

2. The main contention revolved around the applicability of Rule 6(2) of CENVAT Credit Rules. The Bench referred to a previous Final Order dated 26.09.2016, which detailed that Rule 6(2) applies only when dutiable and exempted finished goods are manufactured with the same inputs. In this case, the goods, sulphuric acid, were not considered exempted when manufactured but were cleared under Chapter X procedure. The Bench also distinguished a previous case, Atlas Automotive Components Pvt. Ltd., where a different factual scenario led to the demands of 6% of the value of goods being upheld. The Bench concluded that Rule 6(2) did not apply in the present case.

3. The interpretation of Central Excise Tariff under Chapter X procedure was crucial in determining the outcome of the case. The Bench emphasized that the Revenue's argument regarding the demands of 6% of the value of goods cleared under Chapter X procedure was not valid based on the specific circumstances of the case. The Bench relied on its previous decision and held that the impugned order was correct and legal, leading to the rejection of the appeal.

In conclusion, the judgment provided a detailed analysis of the issues related to the reversal of an amount equivalent to 6% of the value of goods cleared as exempted, the applicability of Rule 6(2) of CENVAT Credit Rules, and the interpretation of Central Excise Tariff under Chapter X procedure. The Bench's decision was based on the specific facts of the case and previous rulings, ultimately upholding the impugned order and rejecting the appeal.