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TMI Blog2018 (11) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... he inputs, input services and on capital goods as per the provisions of Cenvat Credit Rules, 2004. 2. The Department has entertained a doubt that the appellants were clearing the leaf springs to the Jabalpur vehicles factory by availing the benefit of exemption Notification No. 64/95-CX, however, they have not followed the laid down procedure as provided under Rule 6 of Cenvat Credit Rules. The department have believed that the appellant have availed the Cenvat credit on all the raw materials, inputs, components, which were used by them in manufacture of both dutiable finished goods as well as exempted finished goods. It is contended by the Department that on the clearances affected under Notification No. 64/95, the appellants should have reversed Cenvat credit @ 6% of the value of the exempted goods as no separate accounts of Cenvat credit availed on exempted and dutiable goods have been maintained by them. Accordingly, two show cause notices one dated 03/06/2015 demanding reversal of the Cenvat credit of Rs. 1,15,34,488/- and second show cause notice dated 10/03/2016 demanding reversal of Cenvat credit of Rs. 27,80,175/- came to be issued which have been adjudicated by learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t credit availed on proportionate basis on the goods cleared under exemption notification have already been reversed back by them. The learned Advocate has taken support of his argument from catena of judgments, summary of which are given below :- (i) CCE, Calcutta - IV vs. Hastings Jute Mill - 2001 (135) E.L.T. 708 (Tri. - Kolkata) ; and (ii) CCE, Jaipur - I vs. Parasrampuria Synthetics Ltd. - 2003 (160) E.L.T. 503 (Tri. - Del.). 4. On the basis of above judgments, the learned Advocate has tried to establish that whether the goods have been cleared under Rule 57C of Erstwhile Rules, following the procedure laid down under Chapter X the applicability of Rule 57C was not required as the Tribunal in the above-mentioned judgments have held that the clearances affected under Chapter X procedure is not the same as clearances of goods which are wholly exempted on payment of central excise duty and therefore the Rule 57C of Modvat Rules was not applicable. Since, the present provisions of Rule 6 are parallel to the Rule 57C of the erstwhile Modvat Rules and as the goods have been cleared following the rules for goods cleared on the concessional rate of the duty, the provision of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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). Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation II. - For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service." 7. It can be seen from the above that the provisions of Rule 6 covered the exempted goods also and no specific provisions is there for the goods where the provisions of goods at concessional rate of duty for manufacturer excisable goods Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input is Molasses. This is not denied. It is not important at what stage one of these products emerges. What is important is whether the above mentioned products are final products or not. As regards the second question, it is not the Revenue's contention that molasses is not a common input. Molasses is indeed a common input for both the products. As regards the third question, the answer is 'yes' in the present case. In such cases, the assessee is supposed to maintain separate accounts for the receipt, consumption, etc. of the inputs. When the separate accounts are not maintained, the assessee shall reverse 8% of the price of the exempted final products. If the assessee fulfill the condition, he would be complying with the rules and there is no need to disallow the Modvat credit on the entire molasses used in the result. We set aside the order of the Commissioner and allow the appeal (E/171/2006) of the assessee and dismissed the Revenue's appeal (E/457/05) by upholding the Commissioner's (Appeals) order". 9. In view of above, we hold that the appellant are legally required to reverse back the input credit availed on the inputs going into the exempted final products. We also are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpted product reversed even subsequent to their clearance". 11. Following the above decisions, we do not find any infirmity so far as confirmation of reversal of Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004 is concerned, however, since the appellant have already reversed the proportionate amount of Cenvat credit availed by them on the exempted goods and following the judgment of the Tribunal in the case of Mercedez Benz (supra) and Union of India vs. Secure Meters Ltd. (supra), we find that enough compliance of the law under Rule 6 of Cenvat Credit Rules, 2004 since the appellant reportedly have reversed back Cenvat credit proportionately of the exempted goods since before the issue of the show cause notice itself the appellants have reversed back the proportionate Cenvat credits and we do not find any malafide intention on the part of the appellant for intentional attempt to evade or mis-use Cenvat credit and therefore we do not find any ground for imposition of the penalty under Rule 15 of Cenvat Credit Rules readwith Section 11AC of Central Excise Act, 1944. 12. In view of above, the order-in-original stands modified to that extent and appeal is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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