Appeal decision finds appellant not liable for penalty under legal provisions and factual circumstances.

The appeal was disposed of with the decision that the penalty on the appellant was not imposable, considering the legal provisions and factual circumstances of the case.

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Issues:
Imposition of penalty under Section 11AC of the Central Excise Rules 1944 read with Rule 6(3)(b) of the Cenvat Credit Rules 2004.

Analysis:
The appellant, a manufacturer of tower materials and wind mill parts, cleared wind mills at a nil rate of duty by claiming exemption under a specific notification. The appellant availed Cenvat Credit on inputs without maintaining separate accounts for dutiable and exempted final products, leading to discrepancies highlighted during an audit. The appellant paid 10% of the value of exempted goods along with interest upon audit findings. Subsequently, a show cause notice was issued invoking an extended period of limitation for the appropriation of the amount paid and imposition of penalty. The appellant contested the penalty imposition, arguing that they informed the department about availing exemptions and that penalty should not apply as per Rule 6(3) of the Cenvat Credit Rules. The appellant cited relevant case laws to support their contentions.

The respondent argued that the appellant did not maintain separate accounts for inputs and availed Cenvat Credit for both dutiable and exempted products, thereby suppressing facts. The respondent contended that Rule 6 mandates maintaining separate accounts or paying 10% of the value of exempted goods at clearance, and as these facts were allegedly suppressed, the penalty was rightly imposed. The respondent also cited a relevant case law to support their argument.

The main issue was whether the penalty was imposable on the appellant for not maintaining separate accounts for inputs used in manufacturing dutiable and exempted final products. The appellant's lack of separate accounts was acknowledged, and it was noted that at the time of availing Cenvat Credit, it was unknown whether the inputs would be used for exempted goods. Citing relevant case laws, it was concluded that penalty under Rule 15 of the Cenvat Credit Rules was not applicable in such cases. Precedent cases and the factual matrix led to the decision that the penalty was not imposable, despite the undisputed payment of 10% of the value of exempted goods along with interest.

Therefore, the appeal was disposed of with the decision that the penalty on the appellant was not imposable, considering the legal provisions and factual circumstances of the case.

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