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TMI Blog2003 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... elow Rs. 500/- per piece were made wholly exempt from payment of duty under Notification No. 6/2000-C.E., dated 1-3-2000; that the inputs are same whether the watches are of M.R.P. value less than Rs. 500/- or more than Rs. 500/-; that as the appellants were clearing wrist watches bearing M.R.P. less than Rs. 500/- per piece without payment of duty they were reversing, at the time of clearance, Cenvat credit of the duty paid on the inputs which had gone into the manufacture of exempted watches; that the Commissioner, Central Excise, under the impugned Order, has demanded Cenvat credit availed of on inputs used in the manufacture of exempted goods and imposed penalty on all the three appellants on the ground that the appellants had manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, (1) inputs which were lying in stock on 1-4-2000 and (2) inputs which arrived between 1-4-2000 and 31-8-2000; that the inputs lying in stock on 1-4-2000 were those inputs in respect of which credit had been taken in RG 23A, Part 1, before 1-4-2000; that the total credit so taken was Rs. 37,49,600/- out of which Rs. 29,21,111/- had already been availed of prior to 1-4-2000; that the credit which had already been availed of cannot be recovered at any rate; that the fact that the inputs to which such credit related were still in stock on 1-4-2000 makes no difference as no one to one co-relation is required for the purpose of credit; that, further, remaining Modvat credit which was taken in Part 1 when the final product was dutiable but sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat Credit shall not be allowed on such quantity of inputs which are used in the manufacture of exempted goods; that as they were not manufacturing at the material time both the dutiable and exempted wrist watch provisions of Rule 57AD(1) were applicable and the provisions of Rule 57AD(2) were not applicable and accordingly they cannot have cleared the watches on payment of an amount equivalent to 8% of the value of exempted goods; that this facility of payment of an amount equivalent to 8% of the value of the exempted goods is available only when the manufacturer is manufacturing and clearing both the exempted goods and the dutiable goods and they have not maintained separate records for the inputs; that this facility cannot be extended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturers shall maintain separate accounts for receipt, consumption, and inventory of inputs meant for use in the manufacture of dutiable final products and the inputs meant for use in the manufacture of exempted goods and take Cenvat credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. Sub-rule (2), further, provides that the manufacturer, opting not to maintain separate accounts shall pay an amount equal to 8% of the total price of the exempted final product. It has been contended by the appellants that they manufacture watches of M.R.P. up to Rs. 1000/- in the manufacture of which same inputs are used. It is only by Notification No. 6/2000-C.E., dated 1-3-2000 watches of retail sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly mentions wrist watches both valued up to Rs. 500/- and valued above Rs. 500/- which strengthen the submissions of the appellants that they intended to manufacture both types of watches. The show cause notice has been issued in January, 2001 only for the period from 1-4-2000 to 31-8-2000. Nothing has been brought on record also to show that any further notice has been issued for the subsequent period commencing from September, 2000. On a query from the Bench the learned Advocate mentioned that the appellants did manufacture dutiable watches during the financial year, 2000-01. The appellants have also mentioned in the memorandum of appeal that they did manufacture both the dutiable and exempted watches which has not been controverted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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