2008 (2) TMI 156

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....been used in the manufacture of all these products. When these imported inputs were received in their factory, they had not maintained separate accounts for the inputs to be used in the manufacture of dutiable final products and the inputs to be used in the manufacture of exempted final products. However, they segregated the inputs for these purposes at the time of issue of inputs for the manufacture of the finished goods. Where the inputs were issued for use in the manufacture of the exempted goods, the Cenvat credit taken of CVD paid thereon was reversed. This was the modus operandi of the appellants. The department, however, issued a show-cause notice directing the appellants to pay 8% of the price of the exempted goods cleared during th....

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....judication. The present appeal is directed against the appellate Commissioners order. 2. After considering the submissions of learned Counsel for the appellants and learned SDR for the Revenue, I note that, upon receipt of the imported inputs in their factory, the appellants had taken Cenvat credit of the CVD paid on the goods. They did not maintain separate accounts for these common inputs intended to be used in the manufacture of dutiable and exempted products. However, at the time of issue of the inputs for manufacture of final products, they segregated the inputs and reversed the Cenvat credit taken on that quantity of common inputs which was issued for use in the manufacture of the exempted final products. In other words before the ....

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....counsel viz. Commissioner of Central Excise, Mumbai-VI v. Philips India Ltd. [2006 (200) E.L.T. 106 (Tri. - Mumbai)], nitrogen was used as a common input in the manufacture of dutiable and exempted final products and Cenvat credit was taken by the assessee upon receipt of the input in their factory. Obviously, in that case, segregation of the input at that stage was not possible. Therefore, without maintaining separate accounts, proportionate credit was reversed before clearance of the exempted final products. On these facts, this Tribunal, applied the Apex Court's ruling in Chandrapur Magnet Wires case and held that the assessee could not be required to pay 8% of the value of the exempted goods in terms of Rule 57AD of the Central Excise R....