2007 (7) TMI 173

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..... ze Oil, Maize Oil cake and Maize Bran. All items other than plain maize starch and corn gluten are liable to excise duty and the appellant was clearing their produce accordingly. The assessee is eligible and has been availing of Cenvat credit also Under the impugned order, demand has been made in regard to goods cleared without payment of duty on the ground that Cenvat Credit Rules permitted of such demand. The dispute resolves around the scope of Rule 6 of those rules.   3.    Rule 6 relates to the obligation of a manufacturer who produces both dutiable and exempted goods. Sub-rule (1) of that rule states that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goo .....

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..... dit taken was about Rs. 8 lacs. Revenue authorities took the view that the appellant had opted not to keep separate account of inputs (the aforesaid oils) used in the manufacture of both dutiable and exempted goods and, were, therefore, liable to pay 8% of the value of the exempted goods cleared. This has resulted in the demand of about Rs. 8 Crores, even though the disputed credit was only Rs. 8 lacs. The present appeals of the assessees challenge those demands.   5.    Appeal No. E/95/06 of the Revenue contends that the interest demand made by the Commissioner is incorrect and the same is required to be in creased upward.   6.   We take up the assessee's case first.   7.    The con .....

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..... t be made as that would be contrary to the facts of the case and provisions of the rule. Further, there would be no correlation between the benefit (Cenvat) derived by the manufacturer and the demand raised.   9.    The learned D.R. would submit that the assessee's contention regarding impossibility of allocation is not correct as any cost of manufacture, direct or inputs indirect, is capable of allocation among the goods manufactured.. The learned DR would also emphasis that Rule 6 makes no exception in relation to inputs used in production, whether use is direct or indirect.  10.    Upon perusal of the record and on hearing the submissions, we agree that this is not a case where the assessee had o .....

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