2005 (7) TMI 251 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty amount and penalty under Rule 6(2) of Cenvat Credit Rules for failure to maintain separate records of inputs used in manufacturing exempted and dutiable goods.

Analysis:
The appellants sought waiver of pre-deposit of duty amount and penalty as confirmed against them for not maintaining separate records of inputs used in manufacturing exempted and dutiable goods. The counsel argued that the appellants did maintain records for inputs on which credit was availed and for those on which credit was not availed. It was also highlighted that even for inputs initially credited but later used in exempted goods, the credit was reversed. On the contrary, the SDR contended that lack of separate records for some inputs did not exempt the appellants from paying 8% of the value of clearances of exempted goods under Rule 6 of the Cenvat Credit Rules, 2002.

Upon reviewing the impugned order and Rules 6(2) and (3) of Credit Rules, 2002, it was observed that while there was no specific condition for separate stock/storage of common inputs, maintaining separate accounts was deemed necessary. The adjudicating authority noted discrepancies in maintaining separate accounts for certain inputs like felts, wires, oil, and greases. However, the Asstt. Commissioner's report confirmed that the assessee did maintain separate records of inputs used in manufacturing exempted goods and reversed the credit for inputs used in such goods, as observed by the learned Commissioner.

Considering the facts and the reversal of Modvat credit by the appellants for inputs used in exempted goods, it was concluded that the appellants had a strong case on merits. Consequently, the stay application was allowed, and the appeal was scheduled for regular hearing in due course.

The judgment was delivered and pronounced in open court on 8-7-2005 by the Appellate Tribunal CESTAT, New Delhi, with the order being dictated by Member (J) P.S. Bajaj.