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TMI Blog2013 (8) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... t Schedule to the Central Excise Tariff and they are also availing the Cenvat credit facility on inputs viz. Plastic cards and modules (micro controller for smart cards, secure micro controller for smart cards). The Smart/SIM card is made of plastics and is embedded with a hologram to avoid counterfeiting. The second component is module which consists of memory storage and is microprocessor component. The smart cards manufactured by the appellant are of two types i.e. recorded and unrecorded. Recorded smart cards were exempted from payment of duty from 19th July 2007 onwards vide Notification No. 31/2007 dated 19th July 2007 whereas unrecorded cards continued to be dutiable. The appellants were availing the facility of paying an amount equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter, these unrecorded smart cards undergo the personalisation process subsequent to which the recorded smart cards come into existence. He further submits that since the inputs used for dutiable as well as the exempted goods are common, the appellants have opted for not maintaining the separate accounts and were paying amount @ 10% of the value of the exempted goods cleared from the factory. He submits that with effect from 1st April 2008 an additional option was incorporated under Rule 6(3) for proportionate reversal of the credit attributable to input and input services utilised in the manufacture of exempted goods. He submits that there is no provision under Rule 6 prescribing any minimum limit of dutiable production by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were engaged solely in the manufacture of exempted goods and 18% goods were manufactured only to avail the Cenvat credit. 5. After hearing both the sides, we find that the appellants are manufacturers of smart cards falling under Chapter 85 of the Central Excise Tariff. The smart cards manufactured by them are of two types recorded and unrecorded. Recorded smart cards are totally exempted from Central Excise duty whereas unrecorded smart cards are dutiable. It is the contention of the Revenue that the appellants are exclusively engaged in the manufacture of exempted goods inasmuch as during the period August 2007 to June 2008 99% cards manufactured by them were of exempted category whereas 0.18% card were of a dutiable category. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metimes they know that said plastic body would be used for recorded smart card as in those cases it bore the printed matter i.e. name, design, logo of the customer/buyers for which such recorded cards are being manufactured. But in majority of the cases where the plastic cards are being imported by them without any such printed matter and these processes are being carried out locally, it would not be possible to know as to which plastic card would be used to manufacture recorded or unrecorded smart cards. Therefore, it is the contention of the appellants that module in all the cases and the plastic card in majority of the cases are common inputs for the purpose of manufacturing recorded or unrecorded smart cards. 7. The appellants have als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We find that the Commissioner has held in the impugned order that both the inputs plastic card and modules are not the common inputs for the purpose of manufacture of recorded smart cards and unrecorded smart cards as these inputs are user specific and tailor made. The Commissioner had relied on the statement of Shri Naveen Verma and Vikas Kumar Sharma two officials of the appellants. On going through the statement of Shri Naveen Verma, Finance Manager of the appellant we find that he has stated that chips/modules are common inputs for both dutiable and exempted finished goods but the other major input that is plastic card are exclusively user based inputs and they cannot be used interchangeable for exempted as well as dutiable final pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch below that percentage, the manufacturer will be treated as exclusive manufacturer of exempted goods. In absence of any such limit mentioned in the rule Commissioner cannot deny the benefit of Rule 6(3)(1)/ Rule 6[3][b] during the relevant period to the appellants. 11. In the impugned order the extended time limit has been invoked against the appellant on the ground that the appellants have intentionally availed ineligible credit on the inputs which were used exclusively in the manufacture of exempted goods and they had wilfully mis-stated the inputs for dutiable goods as well as non dutiable goods as common input. As discussed in foregoing para, we find that module as well as plastic card in majority of the cases the plastic card are in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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