9911796707
TMI Blog2013 (11) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... of final product, cleared on payment of duty. During March 2010, they also cleared the finished goods to M/s. Neyveli Lignite Corporation Ltd., Neyveli under NIL rate of duty in terms of Exemption Notification No.3/05-CE dt. 24.2.2005. They reversed the amount of Rs.2,21,159.00 towards credit from cenvat account attributable to the inputs contained in the said goods prior to clearance of the goods at Nil rate of duty. A show cause notice dt. 5.4.2011 was issued proposing to demand an amount of Rs.2,86,891/- under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 on the 5% value of the goods cleared at NIL rate of duty. It has also proposed to appropriate the amount of Rs.2,21,159/- as paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs in the manufacture of dutiable and exempted final products and they have not maintained separate accounts and without following the procedure under Rule 6 (3A) of the Cenvat Credit Rules, 2004. It is contended that as they have not maintained proper register as required under the said rule, they have to pay an amount of 5% of the value of exempted goods cleared. He relied upon the decision of the Hon'ble Bombay High Court in the case of CCE Thane I Vs Nicholas Piramal (India) Ltd. -2009 (244) ELT 321 (Bom.). He also relied upon the decision of the Tribunal in the case of Kamra Bottling Company Vs CCE Jaipur -2003 (1600 ELT 487 (Tri.-Del.) which was upheld by the Hon'ble Rajasthan High Court as reported in 2009 (233) ELT 329 (Raj.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:- (i) the manufacturer of goods shall pay an amount equal to five per cent of value of the exempted goods and the provider of output service shall pay an amount equal to six percent of value of the exempted services; or (ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A). Provided that xxx xxx x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entitled to reverse the entries and get the benefit of the tax exemption is a question which merits serious consideration. There is no doubt that the assessee should have maintained separate accounts for duty free goods and the goods on which duty has to be paid. But our attention was drawn to a departmental circular letter on this problem in which it has been clarified by the Ministry of Finance as under :- 3. The credit account under MODVAT rules may be maintained chapterwise. MODVAT credit is not available if the final products are exempt or are chargeable to nil rate of duty. However, where a manufacturer produces along with dutiable final products, final produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final exempted product under Rule 57A. In other words, the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. 8. The appeal is therefore, allowed. The order of the Customs, Excise and Gold (Control) Appellate Tribunal dated 17th May, 1995 is set aside. There will be no order as to costs. 6. In the above mentioned case, the assessee contended that they were unable to maintain separate accounts by segregating the inputs utilized for manufacture of dutiable goods and exempted goods and therefore they ..... X X X X Extracts X X X X X X X X Extracts X X X X
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