Manufacture of excisable and non excisable goods - useing phinolic resin

[KIRTIKUMAR PUROHIT]

We are manufacturing Bagas Prelam Partical Board which is exempted from excise duty. we are useing phinolic resin as input for manufacture bagas board, now my question is that whether if we preper resin in our primises & all the input which we used for resin i.e. phenol, mehtanol, melamine, DGE DBP etc. we forego excise duty from the same and we are kept saperate record for Excisable & non excisable Input and Final Products however Department issue us SCN for demand of duty on Resin. in our case when we keep saperate record for both what impact of such Show Cause Notice?? please reply and help me in such burning issue.

[Surender Gupta]

It is an issue of fact. If you are keeping separate records for excisable and exempted goods, the demand raised on the show cause notice ignoring this fact would be set aside at the appropriate forum. You must provide full details and evidences with the reply to show cause notice. Before that, you must read the allegations made in the show cause notice carefully.

I  undeerstand  from your  details  provided  that  :-

01. You are  a  Mnaufacturer  of  Bagas  Prelam Particle Board   ( Central Excise  Tarriff heading? ).

02. Phenolic Resin  is  used  as  an input  for  manufacturing the particle board.

03. Now  you wish to  manufacture  Resin in your premises .

Then  you  will  be  manufacturing   Particle board  which  is  exempted  and  Resin which is   Excisable  .

If  you  keep seperate  records  for  the two  and (a) Avail Cenvat on the  inputs  of  Phenolic resin and Sale the resin  seperately  in the  domestic market  by charging duty  or   (b)  Not to avail Cenvat  on the  Inouts  of  resin  and  use  all the production as  Captive consumption in the  Production of  particle board.   exciswe  will  not ask for the duty on  Resin if  you will  show then records  of (a)  Non availment of  Cenvat credits  (b) Records  of  Mnaufacturing of  Resins  as  an FG  and  Records  of their consumtion   so that  Excise  should get satisfied  that  No resin  is  being so;d  in the open market  by evading the duty .

Rgds,

KISHOR SANAP

8652453395

AI Summary

Separate records for excisable inputs can rebut excise demands if Cenvat is not availed or captive use is shown.
Where an excisable intermediate (phenolic resin) is manufactured alongside an exempt final product, maintain separate records for excisable and exempt inputs and outputs, and either refrain from availing Cenvat on resin inputs or show that resin is wholly used as captive consumption; if resin is sold, duty must be charged and recorded. A show cause notice disputing non duty on in house resin is a factual issue-full records and evidence submitted in reply can lead to the demand being set aside.