9911796707
TMI Blog2015 (8) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) if a manufacturer is manufacturing dutiable as well as exempted goods, he is required to maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final product and the quantity of inputs meant for use in the manufacture of exempted goods and take credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. Rule 6(3) further provides that if the appellant is not maintaining separate account, he shall pay an amount equal to 8% of the total price, excluding sales tax and other taxes if any paid on such exempted goods. 2. The appellant was not in a position to immediately segregate the records of inputs which go into the production of exempted goods and which go into the dutiable goods. They therefore vide their letter dated 14.7.2004 informed the Revenue that they are not in a position to immediately segregate the inputs which will go into the production of the exempted goods and which will go into the production of dutiable goods and therefore they will be paying an amount of 8% on the price of the exempted tractors as per the provisions of Rule 6(3)(b) of the Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of erstwhile Cenvat Credit Rules, 2002 read with Section 11A of the Central Excise Act, 1944. Interest under Section 11AB was also confirmed. A penalty equal to the amount confirmed was also imposed under Rule 13 of the Cenvat Crediit Rules, 2002 read with Section 38A of the Central Excise Act, 1944 and Rule 15 of the Cenvat Credit Rules, 2004. Aggrieved by the said order, the appellant is before us. 4. Learned counsel for the appellant submitted that the department is demanding an amount equal to 8%/10% of the price of the exempted tractors cleared by them during the period 1.9.2004 to 24.9.2004. The learned counsel submitted that the delay in reversing the credit was due to the detailed accounting and thereafter computation of the credit involved on hundreds of inputs lying in stores, work in progress and used in the manufacture of final exempted tractors. It was submitted that w.e.f. 1.9.2004, they have not availed the credit on inputs used in the exempted final product. They also started maintaining separate accounts for inputs used in exempted and dutiable goods as per Rule 6(2). Hence there is no contravention of Rule 6 of the Cenvat Credit Rules. 4.1 The next submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C). The learned counsel also submitted that strictly speaking, no interest is chargeable as the amount to be reversed was required to be paid by them only by 5.10.2004. In fact, they have paid the amount on 24.9.2004. The learned counsel also submitted the recent decision of the Hon'ble Supreme Court in the case of Sonalac Paints and Coatings Ltd. vs. CCE, Chandigarh reported in 2015-TIOL-77-SC-CX, wherein a similar situation had occurred in case of a unit availing SSI exemption. The unit was required to reverse the credit of inputs available with them, work in progress or contained in the final product as on 31.3.2000, they reversed the said amount only on 3.10.2000 i.e. on a later date and the Hon'ble Supreme Court found the action in order. The learned counsel also submitted the following case laws in support of his contention that once proportional credit on common inputs used in manufacture dutiable as well as exempt product has been reversed there is no need to pay 10% or 8% of the value of exempt goods, in view of the retrospective amendment to Cenvat Rules, through Sections 69 to 73 of the Finance Act, 2010:- (i) Shree Rama Multi Tech reported in 2011 (267) ELT 153 (Guj.); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted various paragraphs of the said judgment. 5.1 The learned AR further submitted that the benefit of the scheme introduced in 2010 cannot be extended to the appellant at this stage as held by this Tribunal in the case of R.R. Paints Pvt. Ltd. vs. CCE, Mumbai reported in 2013 (288) ELT 289 (Tri.-Mumbai). It was submitted that the said order of the Tribunal has been upheld by the Hon'ble Bombay High Court as reported in 2014 (33) STR 156 (Bom.).The learned Commissioner (AR) submitted that the very fact that they have not filed any declaration for the benefit of this scheme during 2010, they cannot claim the benefit of the scheme at this stage.The learned Commissioner (AR) further submitted that the Hon'ble Supreme Court in the case of Amrit Paper vs. CCE, Ludhiana reported in 2006 (200) ELT 365 (SC), has held that the provisions of Rule 57C of the erstwhile Central Excise Rules, 1944 providing for, in mandatory and categorical terms, non availment of credit if final product exempted, would be rendered nugatory and redundant if exemption granted considering absence of any condition in Notification ibid and primacy not to be given to the Notification over statutory provisions contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht percent of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory. Explanation -1 The amount mentioned in the conditions (a) and (b) shall be paid by the manufacturer by debiting the CENVAT credit or othenvise. Explanation -11 if the manufacturer fails to pay the said amount, it shall be recovered along with interest in the same manner, as prescribed in Rule 12. for recovery of CENVAT credit wrongly taken. A reading of the above Rule would indicate that any manufacturer who is producing dutiable as well as exempted goods has to follow either procedure envisaged under Rule 6(2) or Rule 6(3)(b). In the present case, the tractors became exempt w.e.f. 9.7.2004. From that date onwards they followed the procedure as envisaged under Rule 6(3)(b).They followed the said procedure as it was practically not possible by them to immediately segregate their accounting system in respect of inputs going into the dutiable products and exempted products. After working out the details, they put a system in place and w.e.f. 1.9.2004 they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of RR Paints Pvt. Ltd. (supra). In our view, in the present case, the appellant has not reversed the credit on inputs on proportional basis as envisaged in the amended Rule 6(3) and in our view, the discussion on the said Rule is irrelevant in the facts of the present case. In the present case, the appellant has switched over to Rule 6(2) w.e.f. 1.9.2004 and reversed actual credit on its stores, work in progress and finished products as on 31.8.2004 and thus submissions by both sides are irrelevant to the facts of the present case. Similarly, the appellant has submitted number of judgments on the proposition that once proportional credit on common inputs used in the manufacture of dutiable as well as exempted product has been reversed, there is no need to pay 10% or 8% of the value of the goods. Even this does not require any further elaboration or discussion at our end. The learned Commissioner (AR) has submitted that in respect of the inputs used in the manufacture of hydraulic units, the appellant is taking credit of duty paid on inputs and after the manufacture of the hydraulics which are used in the manufacture of exempted tractors, they are reversing the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
