2016 (3) TMI 154 - AT - Central Excise

Tribunal Upholds Decision on Recovery of Exempted Goods Value

The Tribunal upheld the Commissioner (Appeals) decision in the case, rejecting the Revenue's appeal against the recovery of 8% of the value of exempted ... Recovery of 8% of value of exempted goods in terms of Rule 6 (2) (b) of Cenvat Credit Rules, 2002 - failure to to maintain separate accounts regarding inputs used in the manufacture of dutiable as well as exempted items manufactured - Held that:- As the show cause notice itself acknowledges that the entire Cenvat credit taken on inputs during the period August 2003 to July 2004 was paid back by the appellant on 7th August 2004 alongwith interest. This being the factual position as per record. He concluded that there was no need for issue of any show cause notice to recover the amount equal to 8% of value of exempted goods. He also observed that the exempted goods were actually by-products generated during the course of manufacture of refined oil and there was no need for reversal of any credit in view of supplementary instructions contained in CBEC Excise Manual readwith Board Circular dated 03/04/2000. In any case since the assessee has reversed the full amount, there is no question of any proceedings and confirmation of demand against the assessee. We find that there is nothing in Revenue's appeal which can lead to a different inference. The appeal only states the provisions of Rule 6 to say that 8% of value of exempted goods is recoverable. We find nothing on record to interfere with the order of learned Commissioner (Appeals) who examined the issue in detail and arrived at the decision, as discussed above.- Decided against revenue Issues: Appeal against recovery of 8% value of exempted goods due to lack of separate accounts maintenance.Analysis:1. The appeal was filed by the Revenue against an order of the Commissioner (Appeals) regarding the recovery of 8% of the value of exempted goods manufactured by the respondent due to the absence of separate accounts maintenance for inputs used in the production of both dutiable and exempted goods. The Original Authority confirmed the recovery based on Rule 6 (2) (b) of Cenvat Credit Rules, 2002. The Commissioner (Appeals) set aside the original order, stating that the Cenvat credit taken on inputs had been paid back by the appellant along with interest, rendering the recovery unnecessary. The Commissioner also noted that the exempted goods were by-products of the refined oil manufacturing process, and there was no requirement for credit reversal based on supplementary instructions in the CBEC Excise Manual and a Board Circular. The Revenue contended that the lack of separate accounts maintenance violated Rule 6 (3) (b) of the Cenvat Credit Rules, justifying the recovery.2. The Tribunal found that the Commissioner (Appeals) had thoroughly examined the facts and applicable legal provisions. It was observed that the appellant had already paid back the entire Cenvat credit taken on inputs, eliminating the need for recovery of 8% of the value of exempted goods. The Tribunal agreed with the Commissioner's conclusion that no show cause notice was required for recovery. Moreover, the Tribunal concurred with the view that since the exempted goods were by-products, and the appellant had reversed the full amount, no further action was warranted. The Revenue's appeal merely cited Rule 6 without providing grounds for a different interpretation. Consequently, the Tribunal upheld the Commissioner's decision, rejecting the Revenue's appeal and disposing of the respondent's cross objection.This detailed analysis of the judgment highlights the key arguments, findings, and conclusions related to the issues raised in the appeal, providing a comprehensive overview of the legal reasoning and decision-making process followed by the Tribunal.