TaxTMI 
TaxTMI 
2015 (10) TMI 769
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....manufacturing Syringe and availed CENVAT credit under Cenvat Credit Rules, 2004. A show cause notice dated 25.09.2008 was issued proposing demand of CENVAT credit of Rs. 19,68,918/- alongwith interest for the period 2004-05 to 2007-08. It has been alleged that the appellant availed CENVAT credit of Rs. 14,04,483/- on the parts and accessories which is nil rate of duty vide Notification No. 6/2002-CE dated 01.03.2002, as amended by Notification No. 26/2002-CE dated 27.04.2002 (Serial No. 223A of the table appended thereof), but the supplier of parts and accessories paid duty at 16% Adv. at the tariff rate of duty. It has been alleged that the parts and accessories are exempted and the supplier has erroneously paid the duty and therefore, the....
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....t the invoices would show Central Excise duty and therefore, it is covered under Rule 3 of the Cenvat Credit Rules, 2004. He further submits that the demand of the said amount is also barred by limitation. He submits that the invoices showing Central Excise duty and the appellant accordingly availed the credit. There is no suppression of facts with intent to evade payment of duty. 4. On the other hand, learned Authorised Representative on behalf of the Revenue submits that the parts and accessories are nil rate of duty by Notification No. 6/2002-CE (supra) so, the input supplier is not entitled to pay duty and the duty paid by them would not amount to Central Excise duty. He drew attention of the Bench to Rule 3 of the Rules 2004 to subs....
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....nt under Rule 6(3) of the Cenvat Credit Rules, 2004. As per Rule 6 of the Rules, 2004, the manufacturer has been engaged in the manufacture of exempted goods and dutiable goods, cenvat credit was not to be allowed on such quantity of input or input services used in the manufacture of exempted goods. Rule 6 (3) of the said Rules provides that if the manufacturer of goods has not opted not to maintain separate accounts and follow the procedure as prescribed therein, the manufacturer of goods shall pay an amount of 5%/ 6%/ 10% of the value of exempted goods. Rule 3 of the Cenvat Credit Rules, provides that a manufacturer shall be allowed to take credit of the duty of excise and other duty as specified therein. It is clear from the Rules 2004 t....
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....ges and clearing the same without payment of duty whereas the department has demanded reversal of credit at the rate 10% of the value of the parts under Rule 6(3) of the Cenvat Credit Rules 2004 (which requires that if an assessee manufactures both dutiable and exempted goods using common inputs and does not maintain separate records, it can take full credit of duty paid on inputs but will have to pay 10% on the value of the exempted goods at the time of their clearance from the factory). From 01.04.2005 onwards the appellants started paying duty on parts and accessories at the tariff rate of 16% which was also objected to by the department and demand was raised for payment of an amount of 10% of the value of the exempted parts and accessor....