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Ruchi Soya Industries Ltd. Versus CCE

2007 (5) TMI 629 - CESTAT, BANGALORE

CENVAT credit - demand of 10% of the value of 314160.229 MTs of exempted goods - non-maintenance of separate records for dutiable and exempt goods - Held that: - 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 condition of non- availment of input credit in respect of Notification 30/2004 is satisfied - appeal allowed - decided in favor of .....

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f Central Excise Tariff Act 1985 cleared during the period from March 05 to January 06 under Rule 14 of Cenvat Credit Rules read with Rule 6(3)(p) of Cenvat Credit Rules 2004 and a penalty of ₹ 1,00,000/- under Section 11A of CE Act. 2. The appellants are engaged in the manufacture of excisable goods falling under Chapter heading 3815 of CET Act 1985. The goods falling under Chapter 15 are exempted from payment of duty during the budget 2005. They availed Cenvat credit on inputs and the in .....

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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 fro .....

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early barred by time, as all the details had been informed to the department and there was no suppression of facts or mis -representation, mis -declaration. However, the Commissioner in his impugned order rejected all their pleas and held that they were liable to pay 10% of the value of the exempted goods as they had not maintained separate records and they had availed the entire credit. The same is challenged in this order. The Tribunal heard the matter in extensio and passed the interim order .....

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ri-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 regard to the inputs has been done, then they are not required to discharge an amount of 10% equivalent to the value. The Larger bench judgement rendered in the case of Icon Pharma and Surgical Pvt Ltd and Others vs CCE Ahmedabad - 2000 (40) RLT 918 ( CEGAT -LB) .....

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hat it is difficult to understand as to how such huge duty amount could be confirmed when reversal was only ₹ 26 ,59,546 /-. He submits that the Revenue has not given 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 take .....

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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 regard to the inputs has been done, then they are not required to discharge an amount of 10% equivalent to the value. The Larger .....

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2006 (199) ELT 529 (Tri.-Bang.) and Tube Investments of India Ltd. vs. CCE, Madurai - 2004 (177) ELT 880 (Tri.-Chennai). The learned Counsel submits that it is difficult to understand as to how such huge duty amount could be confirmed when reversal was only ₹ 26 ,59,546 /-. He submits that the Revenue has not given 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. 2. We had directed the revenue to fil .....

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submission was that revenue had not given the working out of the duty amount arrived at by them. It is astronomical figure which is more than 400 times the duty involved. On this aspect no comments have been furnished despite directions given in the interim stay order. 3. We have heard both sides in the matter. We find that the appellants have already reversed ₹ 26 ,59,546 /- along with interest. The only plea taken in this pare-wise comments is that they are liable to pay 10% of the value .....

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ai.) (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 .....

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waiver of pre-deposit and staying its recovery till the disposal of the appeal. As the amounts involved in this appeal are huge, matter can be taken up for out of turn hearing on 10 th May 2007." In terms of the stay order, matter has come up for final hearing today. Learned counsel has filed a paper book comprising of 25 judgments in his support and submitted that the issue is covered and contended that the issue is fully covered in terms of the judgments cited by him which includes even .....

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reversed there is no need for payment of duty at 8% of the sale value of the exempted goods. The case laws cited by the ld. Counsel for the appellants are very relevant. Even this bench of this Tribunal, in the case of Glaxo Smithkline Consumer Healthcare Ltd. vs. CCE (supra) has held that when the appellants had reversed the entire credit taken on the inputs used for exempted products the demand of 8% is not sustainable The Hon'ble Supreme Court in the case of Chandrapur Maganet Wires (P) .....

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fact of reversal of the Modvat credit had been intimated to the department in ER I Return. Both the appeals are allowed." Learned counsel also refers to the judgements of this bench rendered in Siripur Paper Mills vs CCE (supra). The finding recorded in para 6 of this order is also reproduced herein below. 6. We have gone through the records of the case carefully. The fact that appellant used common inputs for both the dutiable and exempted goods is not in dispute They are also not maintain .....

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also feel that such a demand over ₹ 2 crores when the credit involved is only ₹ 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 elig .....

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ed Counsel that the issue is covered in their favour in terms of the ruling rendered by this bench in the case of Reid and Taylor by Final Order No. 866/06 dated 5.5.06. The finding recorded in Para 4 to 6 is reproduced herein below: 4. The learned Advocate, relied on the decision of the Apex Court in the case of Chandrapur Magnet Wires (F) Ltd. v. CCE, Nagpur - 1996 (81) E.L.T . 3(S.C.) wherein it is held that, on reversal of Modvat Credit, the assessee cannot be said to have taken credit of du .....

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e pointed out that this case squarely applies to the present case. Further, he said that the Board's Circular stipulating maintenance of separate accounts will have to be read in the context of Rule 6 and could not have been read de hors Rule 6 and this will become all the more relevant since it is a well laid down principle of law that any circular issued by the Board even under Section 378 will have to be in furtherance of and not contrary or in derogation to provisions of the Act or Rules .....

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