TaxTMI 
TaxTMI 
2024 (1) TMI 635
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....with interest and penalties. The said notice also proposed to impose personal penalty on other two appellants under Rule 26 of Central Excise Rules,2002. 1.2 The Adjudicating Authority vide order-in-original dated 24.06.2015 ordered as under :- "(i) Ordered to lapse the credit of Rs. 1,20,80,589/- lying in the balance as on 07.12.2008 under the Section 11 A (2) and 11 A (10) of the Credit Rules. (ii) An amount of Rs. 48,663/- (being 10% of the local clearance of the exempted product) under Rule 6 (3) of CCR attributable to the local clearance; (iii) confirmed the demand of Rs. 40,66,510/- towards balance of credit pertaining to capital goods lying as on 07.12.2008. However, since the said amount was included in the amount of Sr. No. (i) above the same was not demanded again. The respondent also imposed penalty of Rs. 20,00,000/- on Mr. S.P Kalsi and Rs. 25,00,000/- on Ms. Rashmi Anand under Rule 26 of CER. 1.3 The one relevant fact is also that earlier a show cause notice dated 29.08.2013 was issued to the appellant demanding cenvat credit of Rs.35,82,694/- attributable to inputs and input services used in manufacture of exempted product along with interest and penalty. A....
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....bmits that as regard the main allegation in the show cause notice that since the appellant had availed the cenvat credit on the common input service attributed to the exempted goods, the same will not sustain for the reason that as per the proceeding of earlier show cause notice dated 29.08.2013, the case stand concluded and according to which whatever cenvat credit attributable to the exempted goods stand paid along with interest and also paid 25% penalty. As per this admitted position in the present case, there is no case of availment of cenvat credit on the common input services attributable to the exempted goods, therefore, the entire basis of this show cause notice dated 19.12.2013 does not exists and without any foundation for this reason also even the demand on the basis of the allegation made in the show cause notice also does not sustain. He placed reliance on the following judgments:- Commissioner of C.Ex., Nagpur vs. Ballarpur Industries Ltd - 2007 (215 ) ELT 489 (SC) Caprihans India Ltd vs. CCE - 2015 (325) ELT 632 (SC) Commissioner of Customs, Mumbai vs. Toyo Engineering India Ltd - 2006 (201) ELT 513 (SC) Swapne Nagari Holiday Resort vs. Commissioner of C.Ex.,....
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....dication order has clearly travelled beyond the scope of show cause notice. It is a settled law in various judgments that when with regard to any charge/allegation the noticee is not put to notice that issue cannot be decided in the adjudication order. This view is supported by the various judgments cited by the appellant which are as under: - Commissioner of C.Ex., Nagpur vs. Ballarpur Industries Ltd - 2007 (215 ) ELT 489 (SC) Caprihans India Ltd vs. CCE - 2015 (325) ELT 632 (SC) Commissioner of Customs, Mumbai vs. Toyo Engineering India Ltd - 2006 (201) ELT 513 (SC) Swapne Nagari Holiday Resort vs. Commissioner of C.Ex., Raigad - 2019 (21) GSTL 559 (Tri.- Mumbai) Senor Metals Pvt Limited vs. Commissioner of Central Excise & ST, Rajkot - 2023 (7) TMI 1115 - CESTAT Ahmedabad 4.2 In view of the above judgments, it is a settled law that then adjudication order cannot travel beyond the scope of show cause notice, therefore, we hold that the demand is not sustainable on the ground that the adjudication order is beyond the scope of show cause notice. 4.3 As regard the second issue, without prejudice to the above, we find that the demand of 10% of value of exempted goods wher....
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....ying in stock on the date of exemption, and after deducting this amount from the Cenvat credit balance, if any, as on the date of exemption, if any Cenvat credit balance still remains, it shall lapse and the same shall not be allowed to be utilized for payment of duty on any goods whether cleared for home consumption or for export. In our view, this sub-rule would not apply when out of common Cenvat credit availed inputs, more than one final products are manufactured and while some final products have become exempt, others have remained dutiable. Since in terms of sub-rule (4) of Rule 3 of the Rules, the Cenvat credit may be utilized for payment of any duty of excise on any final product, if out of the same Cenvat credit availed inputs, more than one final product are manufactured and out of those final products, one final product has become fully exempt from duty, the Cenvat credit can be utilized for payment of duty on the other final products, which are dutiable and as such, the manufacturer's right to utilize the Cenvat credit for payment of duty on the final products which are still dutiable cannot be taken away just because out of several final products, one final product has....
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.... recorded as under :- "7.1 From a perusal of this sub-rule, it is clear that this sub-rule would be applicable if the some Cenvat credit availed inputs are being used for manufacture of a final product and that final product has become fully exempt from duty. In such a situation, the assessee would be liable to pay an amount equal to the Cenvat credit involved in respect of the inputs lying in stock or in process, or contained in the final products lying in stock on the date of exemption, and after deducting this amount from the Cenvat credit balance, if any, as on the date of exemption, if any Cenvat credit balance still remains, it shall lapse and the same shall not be allowed to be utilized for payment of duty on any goods whether cleared for home consumption or for export. In our view, this sub-rule would not apply when out of common Cenvat credit availed inputs, more than one final products are manufactured and while some final products have become exempt, others have remained dutiable. Since in terms of sub-rule (4) of Rule 3 of the Rules, the Cenvat credit may be utilized for payment of any duty of excise on any final product, if out of the same Cenvat credit availed input....
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....n raised by the department is that capital goods have been used exclusively for the manufacture of exempted goods. In the present case, the appellants were paying duty @ 4% on the goods manufactured by using the very same capital goods. There is no room for doubt that the capital goods were not exclusively used for manufacture of exempted goods. The Tribunal in the case, of S.T.Cotton Exports (P) Ltd. Vs CCE Ludhiana (supra) had occasion to analyse this issue in regard to Notification No.30/2004-CE and Notification No.29/2004-CE. The relevant portion of the judgement reads as under : "4. I have carefully considered the submissions from both sides and perused the records. Capital goods, in question, had been received during January, 2005 to March, 2005 and at that time the goods manufactured by using those capital goods - cotton yarn had been cleared by a duty exemption under Notification No. 30/2004-C.E. However, from June, 2005 onward the appellants started availing benefit of Notification No. 29/04-C.E. in respect of their clearances for export where there is optional rate of duty of 4% and there is no dispute about the fact that Notification No. 29/04-C.E. and 30/04-C.E. were ....