Custom, Excise & Service Tax Tribunal
Cce, Ludhiana vs Ludhiana Beverages Pvt. Ltd on 6 October, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH-160017 DIVISION BENCH COURT NO.1 Appeal No. E/969/2009-Ex(DB) [Arising out of the Order-in-Original No.28/Ldh/2008 dated 06.01.2009 passed by the CCE, Ludhiana) Date of Hearing/Decision: 06.10.2016 For Approval & signature: Honble Mr.Ashok Jindal, Member (Judicial) Honble Mr.Devender Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes CCE, Ludhiana Appellant Vs. Ludhiana Beverages Pvt. Ltd. Respondent
Appearance Sh. V.Gupta, AR- for the appellant Sh. Manish Gaur, Advocate- for the respondent CORAM:Honble Mr.Ashok Jindal, Member (Judicial) Honble Mr.Devender Singh, Member (Technical) FINAL ORDER NO.: 61529 / 2016 PER: ASHOK JINDAL The Revenue is in appeal.
2. The brief facts of the case are that the respondent is engaged in the manufacture of Aerated Water and Beverages Syrup. The Aerated Water was dutiable product but Beverages Syrup i.e. Maaza was exempted from duty. An audit was conducted in the factory from the respondent and it was noticed that the respondent is not maintaining separate records in respect of receipt, consumption and inventory of Furnace oil used in the manufacture of dutiable final products and exempted final products i.e. Maaza as per Rule 6(2) of the Cenvat Credit Rules, 2004. Therefore, a show cause notice was issued to the respondent, as the Respondent has not maintained separate records for used of furnace oil utilized in the manufacture of dutiable as well as exempted goods, therefore, as per Rule 6(3)(b) of the Credit Rules, the respondent is required to pay 10% of the total price of the exempted goods clear by them. The show cause notice was adjudicated and the Ld. Commissioner hold that as the appellant is not availing the cenvat credit of furnace oil used in manufacturing of exempted final product, therefore, the demand is not sustainable against the respondent and the proceedings against the respondent were dropped. Aggrieved from the said order, the Revenue is before us.
3. The Ld. AR supported the grounds of the appeal and submits that IV. The Commissioner in his observation while dropping the demand has held that notice had tried to not avail any credit on that much quantity of input is used in the manufacture of exempted goods, although the quantity could not be factually recorded on day to day basis, but was calculated by them at the end of the month, on the basis of a self devised formula, which they had already disclosed to the department. The Commissioner also did not consider the records maintained by them as separate record under the provision of Rule 6(2), as they had maintained the records on their own on the basis of formula devised by them which did not fulfil the statutory requirements of Rule 6(2). Thus the notice did not follow the prescribed procedure and hence was required to pay an amount equal to 10% of the total price of the exempted final product.
4. On the other hand, the Ld. Counsel for the respondent submits that the respondent vide from their letter dated 08.12.2007 has duly intimated the Superintendent, Central Excise Range-II, Division-I, Ludhiana, that they were taking Cenvat Credit on that amount of furnace oil which was used in the manufacturing of dutiable goods after deducting quantity of furnace oil used in the manufacture of exempted final product at the end of the month. The said quantity has been determined on the basis of a formula. The respondent has already been submitted the said formula to the department on 14.09.2006. It is his submissions that the Revenue has misinterpreted the provisions of Rule 6(3) of the Credit Rules. As the provision provides for payment of 10% of the exempted goods in case where the assessee opts to avail the cenvat credit on inputs and opts not to maintain separate accounts. It is his submissions that the specific records were maintained and the respondent only availed credit on the furnace oil that was used in the manufacture of dutiable goods based on a specific formula.
5. The Ld. Commissioner (A) has held that though the respondent is not maintaining separate records of receipt, inventory and consumption of furnace oil used in exempted product but the respondent has availed the credit only on furnace oil which is used in manufacture of dutiable final product. The Ld. Commissioner (A) has relied on the decision of Chandrapur Magnet Wires (P) Ltd. V. CCE, 1996 (81) ELT 3(SC). He submits that the respondent has complied with the provisions of Rule 6 of the Cenvat Credit Rules, 2004, therefore, the respondent is not required to pay 10% of the value of exempted goods. He further submits that the respondent is not covered under Rule 6 of CCR as the respondent is not taking cenvat credit on furnace oil which is used in the manufacture of exempted product. In that circumstances, the impugned order is to be upheld.
6. Heard the parties and considered the submissions.
7. In this case, the contention of the respondent throughout the investigation is that they are not availing cenvat credit on furnace oil used in manufacture of exempted final product as per formula calculated by them. This fact has not been contraverted by the Revenue with any tangible evidence, moreover, the Ld. Commissioner (A) has held that during the proceedings have observed that the respondent is not availing the cenvat credit on furnace oil used in manufacture of final exempted product as per the formula and dropped the proceedings. In that circumstance, relying on the decision of Cadila Healthcare Ltd. reported in 2009 (248) ELT 311 (Tri. Ahmd.) wherein this Tribunal has observed as under:
2. Our attention stands drawn to the findings of the adjudicating authority, which are to the effect that the notice had taken proportionate Cenvat Credit on that quantity of input which is used in the manufacture of dutiable goods only. However, the adjudicating authority has confirmed the demand on the sole ground that separate accounts have not been maintained by the appellant. it is the contention of the ld. Advocate that on that face of clear findings that the credit was availed only in respect of the quantity of furnace oil which was used in the manufacture of dutiable goods and no credit was availed in respect of that part of the furnace oil which was used in the manufacture of exempted goods, the demand of an amount equivalent to 10% of exempted final product is not justified on the sole ground that separate accounts were not maintained. In any case, submits that the Ld. Advocate that larger bench decision of the Tribunal in the case of Nicholas Piramal (India) Ltd. reported in 2008 (232) ELT 37 (Tri.-LB) = 2008-TIOL-1877-CESTAT-Mumbai (L.B.) is to the effect that even the entire credit is taken, it is sufficient if at the time of removal of the exempted products, proportionate input credit is reversed. In any case, the credit availed is only to the extent for which they are eligible and as such there was not justification for invoking Rule 6(3)(b).
3. We agree with the above contention of the Ld. Advocate. In view of the clear findings of the original adjudicating authority in para 21 of the order, that no credit stand taken in respect of that part of dutiable furnace oil which has been used in the manufacture of exempted products. The demand at the rate of 10% of value of such exempted products is not called for. We accordingly set aside the impugned order and allow the appeal with consequential relief to the appellant.
8. We hold that the demand is not sustainable against the respondent and proceedings against the respondent were dropped. Therefore, we do not find any infirmity in the impugned order. The same is upheld. The appeal filed by the Revenue is dismissed.
(Dictated and pronounced in the open court)
(Devender Singh) (Ashok Jindal)
Member (Technical) Member (Judicial)
rt
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E/969/2009
CCE, Ludhiana Vs. Ludhiana Beverages Pvt. Ltd.