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2022 (12) TMI 92 - AT - Central ExciseCENVAT Credit - requirement to reverse credit in respect of inputs and input service attributed to exempted goods - liability to pay 5% / 10% in terms of Rule 6(3) of Cenvat Credit Rules, 2004 - HELD THAT:- It is not disputed that appellant have been maintaining separate record for cenvatable and non-cenvatable inputs in RG-23 Part-I and Form-IV register respectively. The appellant made some transfer entry due to the reason that at times the input which was issued for exempted goods from their Form-IV register, subsequently because of the use in the dutiable goods, transfer to the accounts of dutiable goods i.e. Part-I and similarly, the transfer entry was made for vice-versa. Due to this transfer entry, the Adjudicating Authority cannot say that they are not maintaining separate accounts. It is clear that the appellant have not taken or reversed the Cenvat credit in respect of input and input service. The Adjudicating Authority has confirmed the demand of Rs. 1,98,42,913/- in terms of Rule 6(3) of Cenvat Credit Rules, 2004. In case of demand under Rule 6(3) for the amount 5%/ 10%, is made the appellant became entitle to take credit in respect of all inputs and input service irrespective of the use of the same either in the dutiable or exempted goods. Therefore, if the appellant have already reversed/ not taken credit of Rs. 2,27,92,622/- then the demand of Rs. 1,98,42,913/- which is lesser than the foregone credit of the appellant , will not sustain. Even though the Adjudicating Authority has some doubt about manner of maintenance of separate accounts but the fact remains that the appellant have not taken/ reversed Cenvat credit in respect of input and input service of Rs. 2,27,92,622/-. On this basis itself, without going into correctness of the separate accounts, the demand is not sustainable. The demand under Rule 6(3) of Cenvat Credit Rules, 2004 is not sustainable - the interest and penalty is also not maintainable. Personal penalty of Rs. 10,00,000/- imposed on Shri Rajesh Kumar Sinha, Manager (Administration) & Authorised signatory of M/s. Manglam Drugs & Organics Limited being consequential to demand which is sustainable, is also not maintainable - Appeal allowed.
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