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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 ..... he 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 3823.00 respectively of the Schedule to CETA, 1985 valued at Rs. 2,76,84,119/- ( Rs. 2,49,62,985 & Rs. 27,21,134/- respectively) at Nil rate of duty along with the clearances of dutiable products as Refined Edible Oil and Vanaspati Ghee. The said goods were manufactured out of Cenvatable inputs like Caustic Soda Lye, Organic chemicals, TBHQ etc. and no separate accounts of inputs were maintained by the assessee. Thus as per provisions of Rule 6 of the erstwhile Cenvat Credit Rules, 2002, they were liable to pay an amount of Rs. 22,14,730/- i.e. 8% of value of clearance which was not paid by them at the time of clearance of exempted goods. Hence, proceedings were initiated against the assessee vide SCN dated 28.02.2005 proposing therein recovery of an amount of Rs. 22,14,730/- alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for short) allowed the appeal of the assessee setting aside the OIO dated 30.05.2005. the adjudicating authority in para 8, 9, 10, 11, 12 & 13 of OIL observed as under:- "8. I have carefully gone through the case record, submissions made by the appellants in appeal memorandum and at the time of personal hearing. I find that, Adjudicating Authority has held that the Appellant No. 1 was not maintaining separate account and has contravened Rule 6 of Cenvat Credit Rules 2002. In this regard, they were maintaining separate accounts of inputs, they submitted copies of the same to the Adjudicating Authority. Sh. Deepak Hazara, Authorized Representative of Appellant No.1, in his statement dated 01.10.2004 had clearly stated that "they were maintaining separate record for exempted and dutiable goods" however he could not depict the figures of clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. 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 order No. A/56391-56392/2016-SM [BR] dated 24.11.2016 (hereinafter referred as 'impugned Final Order") dismissed the appeal of the Department on the grounds that the adjudicating authority has not given any clear finding as to why the said stand of the assessee of maintaining separate accounts for the inputs is not acceptable and even OIO nowhere deals with the said letter of the assessee intimating that they were maintaining separate accounts. In such a scenario no infirmity can be found in the Commissioner (A) order lying down that the assessee were maintaining separate accounts for the inputs to be used in the dutiable as well as exempted products. The learned CESTAT in para 8, 9 and 10 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 man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reproduced below:- "2. Suggestion for better compliance including systematic improvement and modification in the legal arrangements. The assessee was advised to take Cenvat Credit of inputs/capital goods properly and to keep separate account of inputs where these are used in exempted as well as dutiable products." In view of the above suggestion, it is clear that the assessee till the date of audit concluded on 19.07.2004 had not maintained any such separate accounts for receipt and consumption of common inputs. Information regarding maintenance of such separate records was given to the department only vide letter dated 23.12.2004 i.e. 5 months after the audit. 4. That the assessee had debited Rs. 54959/- on 22.09.2003 being credit taken on the inputs exclusively used in production of exempted goods during April 2003 to August 2003 when the same was pointed out by the Audit in the year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 an amount equal to eight percent of the total price of the exempted final products i.e. Soad & Acid Oil, after excluding Sales Tax and other Taxes. Assessee has contended regarding Acid Oil that this is not a final product. This is a "Bye Product" obtained during the process of manufacture of the final product and is cleared without payment of duty, therefore, mischief of Rule 6(3)(b) of Cenvat Credit Rules, 2002 shall not be attracted as the same is attracted if the goods cleared without payment of duty is a "Final Product". Therefore, Acid Oil being a bye-product will not fall under purview of Rule 6(3)(b) bid." Further, on the strength of their letter dated 11.03.2004 they contended that they were maintaining separate inventory in respect of caustic soda liquid to be used in manufacture of Soap since 01.04.2003 and in this regard they had intimated to the Central Excise Department as back as on 23.12.2004 and hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azara 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 which reads as under:- "8. I have carefully gone through the case record, submissions made by the appellants in appeal memorandum and at the time of personal hearing. I find that Adjudicating Authority had held that the Appellant No. 1 was not maintaining separate account and has contravened Rule 6 of Cenvat Credit Rules 2002. In this regard, I observe that, the Appellant NO. 1 has contended that, they were maintaining separate accounts of inputs, they submitted copies of the same to the Adjudicating Authority. Sh. Deepak Hazara, Authorized Representative of Appellant No. 1, in his statement dated 1.10.2004 has clearly stated that "they were maintaining separate record for exempted and dutiable goods" however, he could not depict the figures of clearance of exempted goods in ER-1 statement. I also observe that the adjudicating authority had concluded that statements dated 1.10.2004 are contradictory and appellant no. 2 was involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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