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2016 (7) TMI 1146 - CESTAT NEW DELHI

2016 (7) TMI 1146 - CESTAT NEW DELHI - TMI - Cenvat Credit - common input services - failure to maintain separate accounts for the use of inputs for dutiable as well as exempted products as required under Rule 6 (3) (b) of the Cenvat Credit Rules - Held that:- on reversal of the Modvat credit, the Assessee cannot be said to have taken credit of duty on the inputs utilized in the manufacture of final products. When this Apex court judgment is applied to the present case, the Cenvat credit on comm .....

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rwal, Authorized Representative (DR) - for the Respondent. ORDER The appeal is directed against the order of the Commissioner, Indore dated 21/07/2008. 2. The appellant is engaged in the manufacture of dutiable goods such as Sulphuric Acid, Detergent Powder etc. and exempted goods like Single Super Phosphate (Fertilizer). A portion of the sulphuric acid is also cleared without payment of duty for special purposes. The appellant availed the Cenvat credit on certain services, such as Courier Servi .....

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lant was slapped with demand of ₹ 80 lakhs approximately under Rule 6 (3) (b) @ 10% of the value of the exempted goods. It is also to be noted that the total credit availed on the common services was to the extent of ₹ 14,363/- which was also reversed by them alongwith interest on 25/3/2006. 3. The appellant has challenged the impugned order with the submission that for a meager credit of ₹ 14,363/- the demand of over ₹ 80 lakhs alongwith equal amount of penalty is absolu .....

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Shri A. Upadhyay, learned Advocate for the appellant as well as Shri Yogesh Agarwal, learned DR for the Revenue. The facts are not in dispute. Admittedly Cenvat credit to the tune of ₹ 14,363/- has been availed and utilized by the appellant on common services. A mechanical application of Rule 6 (3) (b) of the Cenvat Credit Rules has lead the Commissioner to a demand of over ₹ 80 lakhs, calculated @ 10% of the value of the exempted products cleared alongwith imposition of a penalty o .....

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to be presumed as not having been taken up initio. In such a case there will be no justification for any demand under Rule 6 (3) (b) of the Cenvat Credit Rules. We find that identical issues have been brought up before the Tribunal time and again. In one such case in CCE, Hyderabad - III vs. Swastik Vegetable Oil Products Ltd. reported in 2004 (168) E.L.T. 206 (Tri. - Bang.). Under similar circumstances, the Tribunal set aside the demands made under Rule 6 (3) (b). The Tribunal has held as foll .....

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