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2016 (2) TMI 217 - CESTAT KOLKATA

2016 (2) TMI 217 - CESTAT KOLKATA - TMI - Cenvat Credit - manufacture of dutiable and exempted goods - Rule 6 - Quantity of inputs and proportionate credit availed, on the manufacture of dutiable final products - Held that:- The entire demand has been worked out only on the basis of non-compliance of Rule 6(2) of CENVAT Credit Rules, 2002. Needless to mention that by virtue of Finance Act, 2010 an assessee has been allowed to reverse proportionate credit availed on the inputs that were used in t .....

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Hence, other issues raised by the Revenue about wrong calculation, reduction of demand etc. become irrelevant and accordingly not dealt with. Further, we find that for the subsequent period the department has accepted the formula adopted in availing the credit on inputs attributable to dutiable products and dropped the demands. In the result, the impugned order is set aside to the extent of confirming demand of ₹ 6,59,516/- and imposition of penalty of ₹ 3.00 Lakhs with inte .....

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ner of Central Excise, Ranchi, the assesse & the Revenue both are in appeal against the said order. 3. In the first round of litigation this Tribunal vide order No. A-10-11/Kol/2009 dated 6/01/2008 allowed the assessee s appeal and dismissed the Department s appeal. Aggrieved by the said order, the Department preferred an appeal before the Hon ble High Court of Jharkhand at Ranchi. The Hon ble High Court by its order dated 14th September, 2012 set aside the Order of the Tribunal and directed .....

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dit availed had been used. Fourteen periodical show cause notices were issued to the appellant for the period from March, 2003 to August, 2004 alleging that since the appellant had used common inputs in the manufacture of dutiable as well as exempted final products, without maintaining separate account for receipt, consumption and inventory of inputs, in accordance with Rule 6 (2) of the CENVAT Credit Rules, 2002; thus the appellant were required to pay 8% of the value of the exempted final prod .....

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ated 06/7/2006. Consequently, the present impugned order was passed on 26/3/2008 in the de novo proceeding reducing the demand from ₹ 77,07,145.93 to ₹ 6,59,516/- and penalty from ₹ 10.00 Lakhs to ₹ 3.00 Lakhs. Aggrieved, the assesse is in Appeal against the confirmation of demand and penalty, whereas the Revenue has also filed the appeal against the reduction in demand and penalty. 5. Ld. Sr. Advocate Dr. Samir Chakraborty for the applicant has submitted that the demand .....

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It is his contention that before availing CENVAT Credit on the inputs, the appellant had addressed two letters dated 11th March, 2003 and 20th March, 2003 informing the proper officer that they would be availing CENVAT Credit proportionately only to the extent of the inputs that would be used in the manufacture of dutiable products arrived at as a percentage of the total production of dutiable and exempted goods during the respective period i.e. April, 2002 to February, 2003 and subsequent le .....

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ed the proportionate credit attributable to inputs used in the exempted final products. On the other hand, from the letters addressed to the Range Superintendent, it would be evident that they have availed credit on the inputs to the extent that were used in the manufacture of dutiable products only. In support, he drew the attention of the Bench to few cenvatable invoices wherein it is mentioned that the credit has been availed to the extent of 12.18% of the total duty paid against the inputs m .....

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in the manufacture of exempted products. Hence only for back ward calculation of the proportionate credit, attributable to dutiable goods cannot be said that the condition stipulated in Rule 6(2) had not been complied with. 8. The Ld. Advocate has also submitted that the Ld. Commissioner of Central Excise (Appeals), Ranchi vide Order-in-Appeal No. 76/RAN/2007 dated 1/08/2007 allowed the appeal of the appellant setting aside the demand for the subsequent period from September, 2004 to March, 200 .....

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ubmits that at the relevant point of time, the appellant had not maintained separate inventory of inputs meant to be used in relation to manufacture of dutiable goods and exempted goods, respectively; no issue slips were recorded in the relevant CENVAT Credit register about use of such inputs. He has submitted that the use of inputs in the dutiable products had been arrived at by the appellant on the basis of backward calculation, hence, the demand was confirmed for non-compliance/observation of .....

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it is categorically stated that the appellant had availed proportionate credit only to the extent of use of inputs in or in relation to the manufacture of dutiable final products. Further, he submits that the reduction of demand by the Commissioner in the de novo order is incorrect. It is his contention that the ld.Commissioner has erroneously reduced the liability to the extent of ₹ 22,46,401/- on the ground that CENVAT Credit had not been taken on exempted inputs, which is irrelevant to .....

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, inventory of inputs, issue slips for inputs meant for use in the manufacture of dutiable and exempted final products were not maintained. The claim of the appellant on the other hand is that they have maintained meticulously separate records for the use of inputs in the manufacture of dutiable final products and exempted final products; availed CENVAT Credit only on the use of inputs in the manufacture of dutiable final products. But, maintenance of records and use of such inputs had been arri .....

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tegorically stated that the appellant had availed CENVAT credit proportionately on the inputs taking into account the consumption of inputs in the making of only dutiable final products, after calculating proportionate use of inputs in the production of the dutiable final products. From the said report dt.09.07.2015, which also refers to an earlier report of the divisional officer dated 27.02.2007, it is clear that the appellant had not availed CENVAT Credit on the inputs that had gone into the .....

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manufacture of dutiable as well as exempted products and also the records were not maintained in accordance with issuance of inputs like issue slips of inputs, used in the manufacture of dutiable as well as exempted products. On the other hand the assesse through its letters dated 11.03.2003 and 20.03.2003 communicated to the department the methodology by which they had arrived at the quantum of credit involved on the inputs used in or in relation to the manufacture of dutiable final products o .....

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