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TMI Blog2013 (11) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... dutiable final products from the final products which are exempt from duty - the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid - This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products - The appellant is unable to identify the inputs used in the exempted final product and they have reversed the credit before clearance of the goods - the demand of 5% of value of the exempted goods under section 6 (3) (a) of the Cenvat Credit Rules is not sustainable – order set aside – Decided in favour of assessee. - Appeal No.E/430/12 - FINAL ORDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. He also demanded interest and imposed penalty of Rs.2000/- under Rule 15 of the CCR 2004. Commissioner (Appeals) rejected the appeal and upheld adjudication order. 2. Ld. Advocate on behalf of the appellant submits that they were unable to maintain separate accounts as they were not in a position to identify the portion of the inputs used in the manufacture of exempted final products and therefore they have reversed the credit prior to removal. It is submitted that they have reversed the credit in the month of March 2010 and by their letter dt. 9.2.2011 informed the same to the department. It is contended that after receipt of their letter, show cause notice dt. 5.4.2011 was issued. He relies upon the decision of the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer of dutiable and exempted goods and provider of taxable and exempted services.- (1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2). Provided that xxx xxx xxx (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he month of March 2010 cleared 17,834 Kgs. of Rubber Mix/Compounds valued at Rs.57,37,813/- to M/s.Neyveli Lignite Corporation Ltd. at NIL rate of duty. The appellant reversed the credit of Rs.2,21,159/- on the inputs used in the manufacture of the exempted goods. By a show cause notice dt. 5.4.2011, it was proposed to recover an amount of Rs.2,86,891/- from them equal to 5% of value of the goods cleared at NIL rate of duty during the month of 2010. The appellant took a definite stand before the lower authorities that they were unable to identify the inputs used in the manufacture of exempted goods and the separate accounts were not maintained and they reversed cenvat credit attributable on the quantity of inputs contained in exempted goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the removal of such exempted final products. This circular deals with a case where the manufacturer produces dutiable final products and also final products which are exempt from duty and it is not reasonably possible to segregate inputs utilised in manufacture of the dutiable final products from the final products which are exempt from duty. In such a case, the manufacturer may take credit of duty paid on all the inputs used in the manufacture of final products on which duty will have to be paid. This can be done only if the credit of duty paid on the inputs used in the exempted products is debited in the credit account before the removal of the exempted final products. 7. In view of the aforesaid clarification by the? Department, we s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 7. The case laws relied upon by the learned AR is in different context. In the case of Nicholas Piramal (India) Ltd. (supra), the issue was whether the Tribunal was right in allowing the assessee for reversal of credit taken, instead of insisting upon the assessee to pay an amount equal to 8% or 10% of the total price of the exempted goods as per Rule 6 (3) (b) of Cenvat Credit Rules, 2002. In that case, the assessee used the inputs in the manufacture of Crude Vitamin-A which is an intermediate product. Crude Vitamin-A is further used in the manufacture of Vitamin-A being the dutiable final product and Animal Food Supplement being an exempted product. There was no issue that, the assessee was unable to identify the inputs in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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