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TMI Blog2007 (5) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... tment after scrutiny of ER returns for the months from March 05 to January 06 have observed that the assessee had availed and utilized the credit of duty on the inputs, capital goods and input services under the provisions of Cenvat Credit Rules 2004. The department was of the view that during the period March 05 to January 06, as they had cleared quantity of 314160.229 MTs of exempted goods falling under Chapter 15 of CET Act 1985 by using inputs as well as input services as they had not maintained separate records for receipts and utilization of such inputs and input services for the manufacture of dutiable and exempted goods, Therefore, it was alleged in the show cause notice that they were required to pay the amounts equal to 10% of the price excluding sales tax and other taxes payable on such goods of the exempted final products charged by the manufactures for the sale of such goods at the time of their clearance from the factory in terms of sub-rule 6(3) (b) of Cenvat Credit Rules. The appellants denied the charge and contended that they had reversed the credit in respect of any inputs used in the manufacture of exempted goods under Chapter 30 and relied on large number of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the work out of the duty amount arrived at by them which is astronomical in figures. He submits that this amount cannot be arrived at all." The matter was placed for hearing stay application on 29 th March 07. The matter was heard and stay order No 294/07 was passed which is as follows: "The stay application is taken up for hearing. The matter was heard and prima facie case was made out by the appellants. Therefore, the Miscellaneous Order No. 54/2007 dated 13.2.2007 granting interim stay of the matter was granted. Para 2 of the interim stay order is reproduced herein below, which refers to the citations given by the learned Sr. Counsel. 2. The learned Senior Counsel submits that on this very issue, this bench, in the case of GTN Textiles Ltd. in Appeal No. 1020A/2006 by Stay Order No. 97/2007 dated 29.01.2007, has granted full waiver relying on the ruling rendered in the case of K.G . Denim Ltd. vs. CCE, Salem - 2005 (189) ELT 424 (Tri.-Chennai). He relies on the Larger Bench judgment rendered in the case of Franco Italian Co. Pvt. Ltd. vs. CCE, Mumbai-II - 2000 (120) ELT 792 (Tribunal-LB) wherein it has been held that once the reversal of the Modvat credit taken with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a-wise comments and the submissions made by the learned Counsel. We notice that the issue is prima facie covered by the following judgments. (i) K.G . Denim Ltd. vs . CCE, Salem - 2005 (189) ELT 424 (Tri.-Chennai.) (ii) M/s. Hetero Drugs Ltd. vs . CCE, Hyderabad - Final Order Nos. 1518 and 1519/2005 dated 26.08.2005. (iii) CCE, Visakhapatnam vs . Deccan Sugars - 2006 (199) ELT 529 (Tri.-Bang.) (iv) Tube Investments of India Ltd. vs . CCE, Madurai - 2004 (177) ELT 880 (Tri.-Chennai). In all the above noted judgments, the ruling of M/s. Chandrapur Magnet Wires (P) Ltd. has been applied. The contention raised by the Commissioner in the Para-wise comments does not appear to be tenable. The appellants have already reversed the credit availed by them on inputs, therefore, the question of raising demands which are 400 time then the duty leviable does not appear to be justified. The Commissioner has not given out the working of the duty arrived at by the revenue despite directions given in the interim stay order. The appellants have shown prima facie case in their favour and also they have pleaded financial hardship. For all these reason, the stay application is allowed unconditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant used common inputs for both the dutiable and exempted goods is not in dispute They are also not maintaining separate accounts for the inputs used in dutiable and exempted goods. Under these circumstances, they are covered by Rule 57CC /Rule 6. However, it is seen that 95% of the goods produced are cleared, on payment of duty and 5% are cleared at nil rate of duty. The appellants submit that the credit attributable to exempted final products has already been reversed. The dutiable demand at 8% is Rs. 2.69 crores However, the credit attributable to exempted goods is only Rs. 4.29 lakhs . We also feel that such a demand over Rs. 2 crores when the credit involved is only Rs. 4.29 lakhs is unjust especially when the appellants had already reversed credit The Apex Court in the case of Chandrapur Magnet Wires Pvt. Ltd., vs. CCE, Nagpur - 1996 (12) RLT 1 (SC) = 1996 (81) ELT 3 (SC) has held that the reversal of credit on input used in the manufacture of final products amounts to non availment of credit on inputs used in the exempted products and consequently the assessee was eligible for the benefit of the notification as the assessee was not availed of the credit. Applying ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Earth Movers Ltd. v. CCE, Bangalore - 2001 (136) E.L.T . 225 (Tri.-Bang.) CCE, Mumbai, VII v. Pearl Polymers Ltd. - 2003 (158) E.L.T . 775 (Tri.-Mumbai) Final Order No. 1260/2004 dated 21.7.2004 of CCE v. M/s. AVN Enterprises, Bangalore passed by SZB at Bangalore 5. The learned Departmental Representative reiterated the orders of the lower authority. 6. We have gone through the records of the case carefully. Even though the appellants have not maintained separate accounts, they have reversed the credit taken and attributable to the goods cleared free of duty before the removal of the goods from the factory. The Chandrapur Magnets case is squarely applicable to the facts of the case. In that view of the matter, one can safely say that no input credit had been availed. Hence, the condition of non- availment of input credit in respect of Notification 30/2004 is satisfied. The OIA cannot be sustained. The same is set aside. We allow the appeal with consequential relief if any." Learned senior counsel submits that in view of the issue being settled, the impugned is required to be set aside. 7. Learned JCDR refer to the written submissions filed by the Commissioner. However in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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