2017 (3) TMI 1401

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....sugar confectionary containing cocoa and also fruit juice. The cocoa products are dutiable whereas the juice is an exempted product. Though they were maintaining separate accounts for the common inputs used for manufacture of dutiable and exempted products, they were not maintaining separate accounts for the common input services used for manufacture of exempted product. A show-cause notice was issued covering the period April 2008 to November 2008 proposing to recover 10% of the value of the clearances of the exempted products alleging that the respondent has not maintained separate accounts for the common input services used for manufacture of dutiable and exempted products. After due process of law, the original authority confirmed the d....

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.... the respondent has not maintained separate accounts, they are liable to pay 10% of the value of the clearances even though they have reversed the proportionate credit. It is also pointed out by the learned consultant that the judgment in the case of Ballarpur Industries [2007(215) ELT 489 (SC)] relied by department was rendered by the Hon'ble Apex Court prior to the introduction of Rule 6(3A) in the CENVAT Credit Rules. He relied upon the judgment in the case of CCE Vs. Asian Fertilisers Ltd. [2015(322) ELT 666 (All.)] and also CCE, Puducherry Vs. CESTAT, Chennai [2015(323) ELT 323 (Mad.)]. 5. I have heard the submissions made before me. In the impugned order, the Commissioner(Appeals) has analysed the issue in detail. It is seen stated....

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....Court that when Modvat credit is taken on the inputs utilized in the manufacture of the exempted final products on the debit it in the Modvat account, the assessee cannot be said to have taken credit of duty on the inputs utilized in the manufacture of exempted final product. 6. In ETA Technology Ltd. (supra), it was held by the Tribunal at Bangalore that where the Cenvat credit had been reversed before the removal of goods, the manufacturer is not required to pay 8% of the price of the exempted goods. 7. We do not find substance in the contention of the department-appellant that the Company cannot reverse the credit until separate accounts were maintained, for which no finding has been recorded by the Tribunal. 8....