2015 (10) TMI 107

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....ted i.e. goods attracting nil rate of duty. In this case, the appellant had been manufacturing both the dutiable items viz. paper tags, labels, paper cartons and the non-dutiable goods attracting nil rate of duty namely brochures, trade/advertising materials and catalogues etc. 3. The Department says that the appellant viz. M/s. Poorna Graphics were obliged to maintain separate accounts for dutiable and exempted goods as per the provisions of Rule 6(2) of CENVAT Credit Rules and they were not found to have maintained so. 4. The appellant viz. M/s. Poorna Graphics however argues that they had separate accounts and the Department has not come forward to examine and check their said separate accounts. The learned advocate for the appella....

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....ngs in the impugned order is to the effect that, the case of the Department is that reported maintenance of separate accounts is assumption based only and not on factual basis....... From the above, it is clear that not only the inputs which are utilized in the manufacture of exempted goods should be identifiable or its quantity should also be ascertained at the first stage itself i.e at the time of receipt of inputs which are used in the manufacture of exempted goods. Though, apparently, the said findings have been arrived at without analyzing the accounts and ascertaining, whether the same discloses separately the receipt, consumption and inventory of the inputs utilized in the manufacture of dutiable products from those utilized in exemp....

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...., it emerges that the main crux is whether the appellant has maintained separate accounts as required under Rule 6(2) of CENVAT Credits Rules 2004. The appellants argue that vide their letter dt. 24/10/2008, they clarified that they were maintaining accounts in respect of dutiable goods but the Department instead of verifying their submission of 24/10/2008 issued them a show-cause notice on 24/08/2009 and thereafter adjudicated the show-cause notice confirming the demand of duty of Rs. 7,10, 227/- along with interest and imposing equivalent amount of penalty which was confirmed by the Commissioner(Appeals) also by an order dt. 25/01/2012. 7. The learned advocate for the appellant has also argued that they had two sources of procurement o....