TaxTMI 
TaxTMI 
2018 (1) TMI 761
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods except in the circumstances prescribed in Rule 6(2). As per this Rule, the assessee is required to maintain separate account of the common input used in manufacture of exempted and dutiable goods in order to avail credit. As per Rule 6(3) (b), a manufacturer who does not maintain separate account as in Rule 6(2) is required to pay an amount equal to 8% (up to August 2004) and 10% (from September 2004 on wards) of the value of the clearances of exempted goods. Through furnace oil was used as common input by appellants for manufacture of both dutiable and exempted product, they did not maintain separate account. They availed credit of entire d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant has already reversed the credit, the penalties may be set aside. The Ld. Counsel stated that the decision in the case of GNFC (supra) has been doubted by the S.C and the issue has been referred to Larger Bench, as reported in 2012 (286) ELT 481(S.C). That the Hon'ble Apex Court in the earlier decision had opined that the litigation arose on account of conflicting decisions given by various benches of CESTAT and because the Cenvat Credit Rules were not properly drafted. That appellant had availed credit on bonafide belief and that the penalties may be set aside. 3. The Ld. AR Ms. Hemavathy reiterated the findings in the impugned order. She submitted that appellant availed 100% credit on Furnace Oil and used the same for manufact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6(2). Prior to that, the said Rules read as under. (1) The CENVAT credit shall not be allowed on such quantity of input which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). (2) Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel, and manufacture such final products, which are chargeable to duty as well as exempted goods, then the manufacture shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products of in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersed there is no requirement to pay 8%/10% of value of clearance. The Tribunal relied on the decision of Hon'ble High Court of Karnataka in Commissioner vs Himalaya Drug Company 2012 (27) STR 95. Similar view was taken by Hon'ble Gujrat High Court in Shree Rama Muthi Tech Ltd vs UOI 2011 (267) ELT 153(Guj). In the present case the appellant was bonafidely prosecuting the issue by his appellate remedy. Therefore the contention that appellant had not filed application to exercise option does not find favour with us. However, it needs to be verified whether the amount reversed would be the actual proportionate credit or not. For this limited purpose the matter requires to be remanded to the adjudicating authority. 8. As regard, the penalty, ....