2007 (8) TMI 147 - AT - Customs

Tribunal overturns duty demand on newsprint reels. Correct classification upheld.

The Tribunal set aside the Order-in-Original that demanded duty payment from paper manufacturers for clearing news print-in reels without payment. The ... Cenvat/Modvat – Revenue alleged that appellant is not entitle for the Cenvat credit in respect of the CVD paid on the imported sugar equivalent to Cess levied and paid under the Sugar Cess Act, 1982 but appellant denied the allegation – Allow the appellant appeal with consequential relief Issues:1. Demand of duty on cleared news print-in reels without payment.2. Challenge to findings of the Adjudicating Authority regarding payment of duty.3. Interpretation of Cenvat Credit Rules and classification of news print-in reels.4. Justification for demanding payment under Rule 6 of Cenvat Credit Rules.5. Maintenance of separate accounts for dutiable and exempted products.Analysis:The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise and Customs, Visakhapatnam-II. The appellants, manufacturers of paper, were accused of clearing news print-in reels without paying duty and not maintaining separate accounts for inputs used in dutiable and exempted products. The Adjudicating Authority demanded an amount under Rule 6(3) read with Rule 12 of Cenvat Credit Rules, along with interest and penalty. The appellants contested these findings.During the hearing, it was noted that the appellants clear both dutiable and exempted products, with the subject matter being news print-in reels. The classification of news print-in reels had been previously settled by a decision of the Bench, classifying them under Heading 48.01 with a nil duty rate. The appellants did not take Cenvat credit for inputs used in the manufacture of exempted goods, maintaining separate accounts for dutiable and exempted products.The appellant's practice of not taking Cenvat credit for inputs used in exempted goods was highlighted. As per Rule 6(3)(a) of Cenvat Credit Rules, it was sufficient for the appellants to reverse the credit attributable to inputs used in exempted products. The appellants had not taken Cenvat credit for inputs used in exempted products, demonstrating the maintenance of separate accounts. The objection raised by the Commissioner regarding storage of inputs used in both dutiable and exempted products in the same tank was dismissed, emphasizing the importance of maintaining separate accounts.Ultimately, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal with consequential relief. The operative portion of the order was pronounced in open court at the conclusion of the hearing.