2008 (3) TMI 550

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.... Dr. Nitish Birdi, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (J)]. -  M/s. Pepsico Holdings India Private Limited (PEPSI) manufacture dutiable aerated water and exempted soft drink SLICE. PEPSI availed Modvat credit on inputs. They availed credit of duty paid on common inputs viz. furnace oil, sugar, activated carbon etc during the period 9/96 to 2/97. They did not....

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....ity including penalty of Rs. 50,000/- imposed on PEPSI under Rule 173Q of the CER. 2. PEPSI is in appeal before us against the demand for recovery of 8% of the sale price on account of the assessee using common inputs other than furnace oil during the material period. The lower authorities held that reversing the entire credit taken on the common inputs involved after clearance could not r....

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....C. The penal consequences for using common inputs resulted from taking credit of duty paid on them. Ld. Counsel for the appellants submitted that the High Court of Judicature at Allahabad had held that in Hello Minerals Water (P) Ltd. v. UOI [2004 (174) E.L.T. 422 (All.)] that exemption benefit available subject to not taking the input credit was available to the assessee if the credit taken was r....

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....n to maintain separate accounts if he reverses the credit attributable to the inputs contained in exempted products, then there is no requirement of payment of 8/10% on the value of the exempted goods." 4. We have carefully considered the rival submissions. The requirement of having to reverse credit taken on any inputs when separate accounts are not maintained ceases once the assessee rev....