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TMI Blog2017 (11) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... gment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department and confirmed the order of CIT(A). 2. Counsel for the appellant firstly prayed for short adjournment on the ground of non-availability of audit report and notice which was issued to the assessee but we have refused the same and heard on merits. 3. Counsel for the appellant has framed the following questions:- i) Whether the Hon ble CESTAT is correct in dropping demand of Cenvat Credit on common inputs issued under Section 11A of the Central Excise Act, 1944 read with Rule 6 12 of erstwhile Cenvat Credit Rules, 2002 for having not maintained separate accounts as mandated statutorily by law and; ii) Any other question of law as the Hon ble Court may formulate in the facts and circumstances of the case. 4. He contended that in view of the averments made in the appeal memo in para 2, 3, 4, 5, 6 7 which reads as under:- 2. That during the course of scrutiny of the invoices, records of the assessee for the period April 2003 to June 2004 by the Audit, it was observed that the assessee had cleared goods namely Soap and Acid Oil falling under heading No.3401.12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acs Fourteen Thousand Seven Hundred Thirty Only) under Section-11A of Central Excise Act, 1944 read with Rule 12 of Cenvat Credit Rules, 2002 from M/s Kundan Edible Product Ltd. Plot No. 01, RIICO Industrial Area, Khushkhera, Bhiwadi, Distt. Alwar. 2. I order to recover interest on ₹ 22,14,730/- (Rupees Twenty Two Lacs Fourteen Thousand Seven Hundred Thirty only) under Section 11AB of Central Excise Act, 1944 read with Rule 12 of Cenvat Credit Rules, 2002; 3. I order to impose a penalty of ₹ 22,14,730/- (Rupees Twenty Two Lacs Fourteen Thousand Seven Hundred Thirty only) under Section 11AC of Central Excise Act, 1944 read with Rule 13(2) of Cenvat Credit Rules, 2002 on M/s Kundan Edible Product Ltd. Plot No. 01, RIICO Industrial Area, Khushkhera, Bhiwadi, Distt. Alwar. 4. I order to impose a penalty of ₹ 1,00,000/- (Rupees One Lac Only) on Shri Deepak Hazara, authorized signatory of M/s Kundean Edible Product Ltd., Bhiwadi, under Rule 26 of Central Excise Rules, 2002. 3. The aggrieved with OIO, the assessee filed appeal before Commissioner (Appeals), Jaipur who vide Order-in-Appeal No. 73-74 (HKS)/CE/JPR-1/2006 dated 01.03.2006 (OIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble CESTAT in the case of Taher Ali Industries Products Pvt. Ltd. vs. CCE Hyderabad reported in 2006-TIOL-238-CESTAT -Bang is squarely applicable in the instant case. Wherein it has been held that, When an option is given to the manufacturer, Revenue cannot force him to adopt a particular course. This will be against the CENVAT Credit Rules. 10. I find that, as the amount is not recoverable from the Appellant No. 1, the penalty imposed under section 11AC and orders for recovery of interest under section 11AB of Central Excise Act, 1944, read with Rule 13(2) Cenvat Credit Rules 2002, are not sustainable. 11. I also find that, there is nothing on record to prove that, the appellant No. 2 had contravened provisions of Rule 25 of Central Excise Rules 2002. Unless, It is proved, penalty under Rule 26 of Central Excise Rules 2002 is not sustainable. 12. In view of above, I hold that the impugned order is not sustainable in law accordingly, I set aside the same and allow the appeals. 13. Accordingly, appeals are allowed. 4. That aggrieved with the OIA dated 01.03.2006, the department filed an appeal before Hon ble CESTAT, New Delhi who vide final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not taken into consideration while passing the impugned order therefore the impugned order of the Tribunal is liable to be quashed and set aside. 2. That the Hon ble CESTAT has erred in holding that assessee was maintaining separate records hence provisions of Rule 6 of the Cenvat Credit Rules, 2002 were not applicable to them, because the assessee was not maintaining any separate records of inputs used commonly in manufacture of dutiable goods as well as for non-dutiable goods at the time of Audit. The demand in this case pertains to the period from April 2003 to June 2004 and the audit was conducted during 14.07.2004 to 19.07.2004. the conclusion drawn by the Hon ble Tribunal is not correct from the contention of the assessee that they were maintaining separate account of dutiable and nondutiable finished goods whereas they were required to maintain separate accounts of inputs commonly used for manufacture of dutiable goods and non-dutiable goods. Hence, on this count the impugned order is liable to be quashed and set aside. 3. That this fact is also evident from the suggestion made by the audit in report No. 199/2004-05 after completion of audit which is reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der rule 6(3) ibid to pay amount equal to 8% of value of exempted goods. The clear findings of adjudicating authority in OIO in this respect have totally been ignored by the Hon ble CESTAT. 7. That thus assessee never maintained separate records for common inputs as such they were liable to pay amount equal to 8% of the value of exempted goods along with interest. For their failure in doing so they were also liable to penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 13(2) of CENVAT Credit Rules, 2002. 5. He has taken us to para 11 of the order of adjudicating authority which has observed as under:- 11. I find that the Show Cause Notice alleges that as per Rule 6(2) of Cenvat Credit Rules, 2002, the assessee did not maintain separate records for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products (Refined Edible Oil Vanaspati Ghee) and the quantity of inputs meant for use in the manufacture of exempted goods (Soad Acid Oil) and that these exempted goods viz Soad Acid Oil are not covered under Rule 6(3)(a) the assessee as per Rule 6(3)(b) of Cenvat Credit Rules, 2002 required to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eepak Hazara was known to Central Excise rules for maintaining the said separate records then how can he be unknown to the Rules for depicting the figures of clearances of exempted goods in the ER-1 statements. As a matter of fact neither he or they maintained such records at least before 19th July 2004 nor they submitted the particulars about clearances of exempted goods deliberately. If they had maintained such records why had he/they not produced the same before the Audit during 14.07.2004 to 19.07.2004. Therefore, it is evident that Shri Deepak Hazara was involved in selling the exempted excisable goods without debiting or paying required amount and was involved in concealing/suppressing the facts from the Central Excise authorities. As the ingredients of Rule 26 of Central Excise Rules, 2002 available by the acts of the Shri Deepak Hazara he is liable to penal action under the said Rule. Therefore, contention of Shri Deepak hazara is not tenable. Case law referred by him in this regard is also not applicable in the instant case. 6. He contended that the penalty imposed by the authority is just and proper. However, we have gone through the order of Commissioner Appeal whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-TIOL-238CESTAT-Bang is squarely applicable in the instant case, wherein it has been held that, When an optionis given to the manufacturer, Revenue cannot force him to adopt a particular course. This will be against the CENVAT Credit Rules. 7. The Tribunal in para 8 9 has observed as under:- 8. The adjudicating authority has taken note of the said letter of the assessee as also the statement of Shri Deepak Hazara authorized representative of the manufacturing unit wherein it stand clearly recorded that they were maintaining separate records for exempted and dutiable goods and as such records were also submitted before the adjudicating authority. As observed that the adjudicating authority has not given any clear finding as to why the said stand of the appellant is not acceptable. 9. Revenue in their memo of appeal has no where produced any evidence to upset the above finding of the fact by the Commissioner (A). In fact, I find that even in order in original nowhere deals with the said letter of the assessee intimating that they are maintaining separate accounts. In such a scenario no infirmity can be found in the Commissioner (A) order laying down that as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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