2017 (10) TMI 1111

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....cellaneous articles of gold/ silver. All the products of the appellant are dutiable except certain miscellaneous articles of gold / silver which are exempted. Silver articles are further used in the manufacture of electrical contacts which are cleared on payment of duty. The dispute revolves around the cenvat credit availed on inputs such as silver nitrate, tungsten powder, hydrazine hydrate etc. which are used in the manufacture of final products. The department was of the view that since the appellant was clearing duty paid as well as exempted products, they are required to reverse the amount at the rate of 5% of the value of clearance of exempted products, in terms of Rule 6(3) of Cenvat Credit Rules, 2004. Accordingly, show cause notice....

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....ngly, he argued that from the records maintained by the appellant, it cannot be established that duty paid inputs have been used only for the manufacture of dutiable final products. So, he submitted that the appellant is required to reverse the amount as per Rule 6(3) of Cenvat Credit Rules, 2004. 5.  We have heard both sides and perused the record. 6.  Silver is procured by the appellant both on payment of duty and availment of cenvat credit in the form of Silver Nitrate as well as directly from the market without payment of duty in the form of bars. The appellant is manufacturing dutiable final product as well as exempted ones. Their claim is that they have maintained records evidencing the fact that duty paid inputs have ....

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....ng authority. However, Revenue has not brought any evidence on record to establish that duty paid inputs have, infact, been utilized in the manufacture and clearance of exempted products which is the primary requirement to incur the mischief of Rule 6(3). The appellant has also contended that they had purchased 19247 Kgs of silver without duty paid documents whereas the silver contained in the exempted items was only 4364.66 Kgs. This clearly shows that some quantity of silver on which credit was not taken has been used in the manufacture of dutiable goods and not vice versa. 8.  Before enforcing the demand of duty in terms of Rule 6(3), it is incumbent upon the Revenue to bring on record evidence to indicate that inputs on which ce....