TaxTMI 
TaxTMI 
2009 (3) TMI 780
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....er Chapter 30 of the First Schedule to CETA, 1985. 4. The main issue for consideration is whether the assessee have contravened the provisions of Rule 57CC and/or Rule 57AD of the C. Ex. Rules, 1944, inasmuch as they have availed Modvat/Cenvat credit on certain common inputs used in the manufacture of dutiable as well as certain exempted goods and have not maintained separate account in respect of the receipt/use of the said inputs and also have not reversed an amount equal to 8% of the price of the exempted goods at the time of clearance from their factory as required under the said Rules. The case relates to the period 22-10-1996 to 31-3-2001. 5. It will be relevant to list below the observations of the Commissioner, while....
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....xempted goods, the assessee submits that they have been maintaining Form IV register, prescribed under the Central Excise Law and they are also maintaining Bin Cards and the Batch Cards, prescribed under the Drug's law wherein, the receipt and utilization of each and every raw-material, including packing materials is recorded. They have furnished copies of relevant pages of these records. Records have been perused and found that these records give clear-cut account of all the raw-materials used in the manufacture of various products. Further, the records maintained under the Drug Laws were thoroughly scrutinized by the Drug Authorities and the Form IV register maintained for Central Excise purpose was checked by the Audit etc. (d) &....
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..... Form IV register for the inputs on which no Modvat is availed and RG 23A Pt. I & II register for the input on which Modvat credit is availed. The party in their reply have correctly highlighted few cases of inputs accounted for in Form IV register on which no Modvat had been availed and which were used in exempted final product. There are many inputs like rubber stopper, vials, aluminium seals, aluminium foils, cartons, Aluminium plugs which are common for both dutiable and exempted products. For these products also separate accounts for dutiable and exempted final products have been maintained in form of Form IV register and RG 23 Pt. I, Pt. II register respectively. Only in stray cases Modvat credit was availed on inputs which were u....
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.... is clear mention regarding proportionate reversal of Modvat in such cases in RG 23A Pt. II, the copies of which are submitted to the Range office along with the RT 12 returns, thereby making the fact of proportionate reversal known to the Department". 7. Accordingly, the Commissioner accepted the views expressed by the Assistant Commissioner (Preventive) as the same are based on record and dropped the proceedings initiated vide the Show Cause Notice dated 24-9-2001. 8. The Revenue in its 'Grounds of Appeal' has stated as under : (i) Though the SCN was issued without clearly identifying the common input which was used both in dutiable and exempted product, the fact of reversal of credit by th....
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....taken on the common inputs for exempted and dutiable products, the assessee has reversed the proportionate credit on their own. The Tribunal, by the majority Order, in the case of M/s. Nicholas Piramal (I) Ltd. v. CCE, Thane-I reported in 2008 (232) E.L.T. 37 (LB), has held that the payment of 8% or 10% is not required when credit on inputs used in exempted goods is paid. For holding so, the Tribunal relied upon the Hon'ble Supreme Court judgement in the case of Chandrapur Magnet Wires Pvt. Ltd. v. CCE, Nagpur reported in 1996 (81) E.L.T. 3 (S.C.) in which it was held that reversal of duty amount before removal of exempted goods amounts to non-availment of credit on inputs. 10. The Hon'ble Allahabad High Court in the case of Hello M....
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.... and Batch Cards as per the requirements of FDA and have reversed the appropriate Modvat/Cenvat credit, and informed in their RG 23A Part II Register, the contention of the Revenue that there is no option but to reverse 8% of the price of the exempted goods is not sustainable. It is also not a case of suppression as the copies of the RG 23A Part II alongwith the RT12 returns were submitted to the Range office. Thus the fact of proportionate reversal of credit was made known to the Department. 12. The assessee has clarified that the amount of Rs. 91,414/- reversed on 15-7-2001 is not concerned with the inputs used in the manufacture of exempted goods viz. Primacort, Malaquin and Rubiquin but was related to the inputs used m the manuf....