Tribunal emphasizes separate records for exempted goods inputs, finds investigation discrepancies.

The Tribunal allowed the appeal, emphasizing the importance of maintaining separate records for inputs used in exempted goods. It found discrepancies in the investigation and the reliance on selective portions of statements. The appellants ceased taking Cenvat credit on inputs for exempted goods and maintained records accordingly, justifying their contention.

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Issues:
1. Appellants manufacturing biscuits on job work basis for Britannia.
2. Production of invert sugar during biscuit manufacturing process.
3. Duty demand on sugar syrup used in exempted biscuits.
4. Appellant's contention on marketability of sugar syrup.
5. Maintenance of separate records for inputs used in exempted goods.

Analysis:
1. The appellants were involved in manufacturing biscuits on a job work basis for Britannia under an agreement. They availed Cenvat credit on duty paid inputs and utilized it for duty payment on final products. One type of biscuit, "Marie Gold," was exempted from duty due to its MRP being below a certain threshold.

2. During biscuit production, the appellants also produced invert sugar, a mixture of glucose and fructose. The process involved dissolving sugar in water, adding citric acid, and using the syrup in biscuit production within a short timeframe to prevent fermentation. The appellants argued that the invert syrup did not contain preservatives for shelf life extension.

3. A duty demand of Rs. 3,28,16,314 was imposed for the period from 2007-08 to 2011-12 on the sugar syrup used in manufacturing exempted biscuits. The demand was based on the view that the syrup should be dutiable as per Notification No. 67/95-CE and was considered marketable, leading to penalty imposition.

4. The appellant's advocate contended that the sugar syrup was wrongly deemed marketable without substantial evidence. They argued that separate records were maintained, and benefits under Notification No.67/95-CE should apply since Cenvat credit was not availed for inputs used in exempted goods.

5. The Assistant Commissioner highlighted the marketability aspect based on a statement by the Administrative Manager. However, the Tribunal found discrepancies in the handling of the appellant's statement and the lack of thorough investigation. It was observed that the appellants had ceased taking Cenvat credit on inputs for exempted goods and maintained records accordingly, justifying the contention of separate records maintenance.

In conclusion, the Tribunal allowed the appeal due to the failure of proper investigation and the reliance on selective portions of statements. The importance of maintaining separate records for inputs used in exempted goods was emphasized, leading to the acceptance of the appellant's contention.

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