Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Maa Kamakhya Marbles (P) Ltd. on 31 March, 2004
Equivalent citations: 2004(170)ELT580(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by the Revenue, is whether Maa Kamakhya Marbles (P) Ltd. were liable to pay an amount equal to 8% of the value of exempted products in the manufacture of which modvatable inputs were used.
2. Mrs. Charul Barnwal, learned SDR, submitted that the respondents manufacture marble slabs and sand stone slabs and avail Cenvat credit of the duty paid in respect of lubricants; that the Deputy Commissioner, under the Order-in-Original No. 25/2002, dated 26-3-2002, demanded Rs. 30,338/- and imposed a penalty of equivalent amount on the ground that the respondents had used the lubricating oils and greases in the manufacture of exempted goods and they had not maintained separate accounts for receipt, consumption and inventory of the inputs in question; that the respondents were, therefore, liable to pay an amount equal to 8% of the total price of the exempted goods; that, however, on appeal, the Commissioner (Appeals), under the impugned order, has set aside the Order-in-Original on the ground that the respondents had deposited the proportionate amount of credit involved in respect of the inputs used in the manufacture of exempted final products. The learned S.D.R., further, submitted that as per the provisions of Rule 57AD(2) of the Central Excise Rules, 1944, a manufacturer is required to maintain the separate accounts if the inputs are used both in the manufacture of dutiable goods and exempted products; that if the manufacturer does not maintain separate accounts, he has to pay an amount equal to 8% of the total price paid on such goods; that since the respondents had not maintained separate accounts for receipt, consumption, etc. of inputs, they are liable to pay 8% of the price; that Board's Circular No. 595/28/01-CX., dated 16-10-2001, is not applicable as the Board has clarified, vide Circular No. 739/55/03-CX., dated 28-8-2003 that the matter is being further examined in respect of the recovery of 8% of the amount prior to 1-3-2002.
3. On the other hand, Shri O.P. Agarwal, Chartered Accountant, submitted that Board's Circular dated 16-10-2001 mentions that if the manufacturer does not fulfill the requirement of either sub-rule (2) or sub-rule (3) of Rule 6 of the Cenvat Credit Rules, 2001, then in terms of sub-rule (1) of Rule 6 of the Cenvat Credit Rules, the assessee would not be allowed credit on such quantity, which is used for the manufacture of exempted goods and the recovery of such credit taken incorrectly is squarely covered by the provisions of Rule 12; that they have reversed the Cenvat credit proportionately in respect of inputs used in exempted products. The question of charging 8% of the price of the exempted products, does not arise. He also relied upon the decision in the case of SAIL, Bokaro Steel Plant v. C.C.E., Jamshedpur, 2002 (142) E.L.T. 574 (T) wherein it has been held that in absence of machinery provision, recovery of input duty credit at flat rate of 8% cannot be recovered.
4. We have considered the submissions of both the sides. Rule 57AD of the Central Excise Rules, 1944, clearly provided that the Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2). Sub-rule (2) of Rule 57AD provided that where the manufacturer avails of Cenvat credit and manufacture final products, which are chargeable to duty as well as exempted from payment of duty, the manufacturer shall maintain the separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use 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 dutiable goods. It is not in dispute that the inputs in respect of which Cenvat credit has been taken by the respondents were used in the manufacture of both dutiable goods and exempted goods and separate accounts for receipt, consumption and inventory of inputs has not been maintained. In such a situation, sub-rule (2), further, provided that the manufacturer opting not to maintain separate accounts, shall pay an amount equal to 8% of the total price of the exempted final products. In view of the fact that the appellants had not maintained the separate accounts, they have to pay an amount equal to 8% of the price of the exempted final products. The provisions of Rule 57AD are applicable to the facts of the present matter as the inputs had been used also in the manufacture of exempted products and the separate accounts have not been maintained. Therefore, the respondents are liable to pay an amount equal to 8% of the price. Board's Circular dated 16-10-2001, is not an alternative to Rule 57AD. It only clarifies that further action can be taken under Rule 12 of the Cenvat Credit Rules for reversing the Modvat credit. The machinery for realisation of the 8% amount is enhanced in Rule 57AD (2)(b) of the Central Excise Rules, 1944 itself. We, therefore, hold that the respondents are liable to pay amount equivalent to 8% of the price of exempted products. We, however, agree with the learned Chartered Accountant that as the issue involved is regarding interpretation of provisions of Rule 57AD, no penalty is imposable on the respondents. The appeal is disposed of in the above terms.