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TMI Blog2009 (3) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is whether the assessee have contravened the provisions of Rule 57CC and/or Rule 57AD of the C. Ex. Rules, 1944, inasmuch as they have availed Modvat/Cenvat credit on certain common inputs used in the manufacture of dutiable as well as certain exempted goods and have not maintained separate account in respect of the receipt/use of the said inputs and also have not reversed an amount equal to 8% of the price of the exempted goods at the time of clearance from their factory as required under the said Rules. The case relates to the period 22-10-1996 to 31-3-2001. 5. It will be relevant to list below the observations of the Commissioner, while deciding the case : (a) It is submitted by the assessee that the main raw materials used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Cards and the Batch Cards, prescribed under the Drug s law wherein, the receipt and utilization of each and every raw-material, including packing materials is recorded. They have furnished copies of relevant pages of these records. Records have been perused and found that these records give clear-cut account of all the raw-materials used in the manufacture of various products. Further, the records maintained under the Drug Laws were thoroughly scrutinized by the Drug Authorities and the Form IV register maintained for Central Excise purpose was checked by the Audit etc. (d) It was found that Rule 57CC/57AD provides that the assessee should maintain a separate inventory of the inputs used in the manufacture of the exempted goods and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of inputs accounted for in Form IV register on which no Modvat had been availed and which were used in exempted final product. There are many inputs like rubber stopper, vials, aluminium seals, aluminium foils, cartons, Aluminium plugs which are common for both dutiable and exempted products. For these products also separate accounts for dutiable and exempted final products have been maintained in form of Form IV register and RG 23 Pt. I, Pt. II register respectively. Only in stray cases Modvat credit was availed on inputs which were used in dutiable as well as exempted final products, however in such cases party has reversed the Modvat credit proportionately at the time of its usage, in the exempted products as is seen from the remar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate reversal known to the Department . 7. Accordingly, the Commissioner accepted the views expressed by the Assistant Commissioner (Preventive) as the same are based on record and dropped the proceedings initiated vide the Show Cause Notice dated 24-9-2001. 8. The Revenue in its Grounds of Appeal has stated as under : (i) Though the SCN was issued without clearly identifying the common input which was used both in dutiable and exempted product, the fact of reversal of credit by the assessee clearly establishes that they were using some of the Modvat availed on inputs, in exempted products also; (ii) Rule 57CC provides that the manufacturer shall maintain separate inventory and accounts of the receipt and use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of 8% or 10% is not required when credit on inputs used in exempted goods is paid. For holding so, the Tribunal relied upon the Hon ble Supreme Court judgement in the case of Chandrapur Magnet Wires Pvt. Ltd. v. CCE, Nagpur reported in 1996 (81) E.L.T. 3 (S.C.) in which it was held that reversal of duty amount before removal of exempted goods amounts to non-availment of credit on inputs. 10. The Hon ble Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India reported in 2004 (174) E.L.T. 422 (All.) has held that the reversal of the credit can be made even subsequent to the clearance of the final products and it will amount to non-taking of credit and the benefit of exemption Notification No. 15/94-C.E. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of suppression as the copies of the RG 23A Part II alongwith the RT12 returns were submitted to the Range office. Thus the fact of proportionate reversal of credit was made known to the Department. 12. The assessee has clarified that the amount of Rs. 91,414/- reversed on 15-7-2001 is not concerned with the inputs used in the manufacture of exempted goods viz. Primacort, Malaquin and Rubiquin but was related to the inputs used m the manufacture of exported goods and further, the reversal is in the month of July, 2001, while the SCN covers the period upto March, 2001. According to the assessee, this reversal has no relation with the Modvat credit in respect of the inputs used in the manufacture of the above said three products in dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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