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2009 (5) TMI 435 - CESTAT, NEW DELHICenvat Credit- The appellants challenge the order passed by the Commissioner of Central Excise, Jalandhar, whereby the demand and penalty confirmed. The demand of duty has been confirmed on the ground that the inputs used in the manufacture of exempted goods are not identifiable at the first stage and the accounts maintained by the appellants are not in consonance with Rule 6(2) and, therefore, demand for 10% of the value of exempted of goods payable under Rule 6(3)(b) of the said Rules is warranted. Held that- it cannot be said that the appellants have not maintained the accounts in respect of cenvated inputs and non-cenvated inputs. What was necessary for the authorities to ascertain from his account, whether it discloses the accounts pertaining to the receipt, consumption and inventory of the inputs used in the manufacture of dutiable products separately from those used in the manufacture of exempted products. Indeed, the impugned order nowhere discloses any such exercises having been done by the authorities. On the contrary, the findings in the impugned order is to the effect that, “the case of the Department is that reported maintenance of separate accounts is assumption based only and not on factual basis......”. From the above, it is clear that not only the inputs which are utilized in the manufacture of exempted goods should be identifiable or its quantity should also be ascertained at the first stage itself i.e at the time of receipt of inputs which are used in the manufacture of exempted goods. On this count itself, the impugned order is liable to be set aside and the matter is remanded to the Commissioner to consider whether the accounts maintained by the appellants satisfy the requirement of Rule 6(2) bearing in mind the observations hereinabove. Hence, the appeal succeeds.
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