2016 (10) TMI 1196

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....during the period from 12/2011 to 9/2012, claiming exemption under Notification No. 4/2006-CE dated 01.03.2006 (Sl. No. 47B.). However, they did not reverse the CENVAT Credit availed on inputs used for manufacture of these goods. A Show Cause Notice was issued to the assessee demanding Rs. 1,92,000/- representing 5% of the value of the exempted goods under the provisions of Rule 6(3)(i) and 6(2) of CENVAT Credit Rules, 2004, along with interest and also proposing to impose Penalty, alleging that as per Rule 6 (3) (A) appellant ought to have reversed the credit as common inputs were used for dutiable and exempted goods; and appellant did not maintain separate accounts. 2. After due process of law, the Original authority confirmed the dema....

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....the findings in the Impugned Order. 5. I have heard both sides. The impugned demand is made for the reason that appellant cleared both dutiable and exempted goods using common inputs on which credit was taken without maintaining separate accounts as provided in Rule 6(2) of CENVAT Credit Rules, 2004. The crux of the issue is whether the goods cleared under chapter X procedure without payment of duty would fall within the category of exempted goods. The issue has been analysed in various judgments as under: 6. In Aureola Chemicals Ltd V/s. CCE, Indore [2004 (175) ELT 148 (Tri-De) the Tribunal held that the spent Sulphuric Acid cleared by assessee under Chapter X procedure to various manufacturers of fertilizers against CT-2 certificate....

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....ay an amount equal to 8% of the price cleared at Nil rate of duty. 10.As discussed above, the goods cleared under Chapter X Procedure are neither exempted goods nor said to be chargeable to Nil rate of duty as the recipient of the goods are duty bound to use these goods for specified purpose and, if, the goods are not used for specified purpose, goods are liable to duty. In this situation, the goods cleared under Chapter X Procedure cannot be said to be exempted from whole of the duty or are chargeable to Nil rate of duty. In view of the above discussion, the impugned order is set aside and the appeal is allowed. 7. In Hindustan Zinc Ltd V/s. UOI [2008 (223) ELT 149 (Raj)] the Honourable High Court of Rajasthan had occasion to c....