Tribunal upholds demand for payment of exempted goods clearance, sets aside penalty.

The Tribunal upheld the demand for payment of exempted goods clearance under Rule 6 (3) (i) of Cenvat Credit Rules, 2004 but set aside the penalty imposed under Rule 15 (2). The judgment clarified the non-retrospective application of the amendment by Notification No. 6/2010-CE and emphasized the lack of justification for imposing the penalty, providing relief to the appellant only on the penalty aspect.

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Issues:
1. Interpretation of Rule 6 (3) (i) of Cenvat Credit Rules, 2004 regarding demand for exempted goods clearance.
2. Applicability of Notification No. 6/2010-CE dated 27/02/2010 on clearances made in May and June 2009.
3. Imposition of penalty under Rule 15 (2) of Cenvat Credit Rules, 2004.

Analysis:
1. The appeal challenged an order demanding payment equal to 10% of the value of exempted goods cleared without duty payment under Notification No. 46/2008 CE. The appellants failed to maintain separate accounts for inputs used in exempted final products, invoking Rule 6 (3) (i) of Cenvat Credit Rules, 2004. The Tribunal found no legal basis to apply the amendment by Notification No. 6/2010-CE retrospectively to May and June 2009 clearances. The amendment did not indicate retrospective application, and case laws cited were deemed irrelevant to the specific circumstances. The Tribunal upheld the demand for the exempted goods clearance.

2. The Tribunal addressed the contention regarding the penalty imposed under Rule 15 (2) of Cenvat Credit Rules, 2004. The rule allows penalties for wrongful utilization of Cenvat credit due to fraud, collusion, misstatement, or contravention of Excise Act provisions. The Tribunal noted that the appellants had obtained permission for duty-free clearances from the Assistant Commissioner and did not suppress facts. As the show cause notice was issued within the normal period, the Tribunal found no intention to evade duty. Therefore, the penalty equal to the confirmed amount was set aside, and the appeal was partly allowed on this ground.

3. In conclusion, the Tribunal upheld the demand for payment of exempted goods clearance under Rule 6 (3) (i) but set aside the penalty imposed under Rule 15 (2) of Cenvat Credit Rules, 2004. The judgment clarified the non-retrospective application of the amendment by Notification No. 6/2010-CE and emphasized the lack of justification for imposing the penalty in the case, ultimately providing relief to the appellant only on the penalty aspect.

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