Custom, Excise & Service Tax Tribunal
Cce,, Trichy vs M/S. Tamilnadu Newsprint And Papers Ltd on 29 May, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/1028/2003
(Arising out of Order-in-Original No.11/2002 dated 13.11.2002 passed by the Commissioner of Central Excise, Tiruchirappalli)
For approval and signature:
Honble Shri P.K. Das, Judicial Member
Honble Shri R. Periasami, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities?
CCE,, Trichy Appellant
Vs.
M/s. Tamilnadu Newsprint and Papers Ltd. Respondent
Appearance Shri M. Rammohan Rao, DC (AR), for the Appellant Shri S. Muthuvenkataraman, Advocate for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing: 29.05.2014 Date of Decision: 29.05.2014 Final Order No.40344/2014 Per P.K. Das Revenue filed this appeal against the order of the Commissioner of Central Excise, whereby the proceedings initiated against the respondent vide show-cause notice dated 19.7.2002 was dropped.
2. Heard both sides and perused the records.
3. The relevant facts of the case, in brief, are that the respondents were engaged in the manufacture of Paper and Newsprint classifiable under Chapter 48 of CETA, 1985 and availing MODVAT/CENVAT credit under CENVAT Credit Rules, 2001. The respondent removed an intermediate product, Lapped Chemical Bagasse Pulp, a non-dutiable product. They availed MODVAT/CENVAT credit for inputs viz. Furnace Oil, Hydrogen Peroxide, Caustic Soda, Liquid Chlorine etc. used in the manufacture of dutiable and exempted products. By Show Cause Notice dated 19.7.2002, the respondent was directed to pay the amount of Rs.24,74,092.20 being 8% of the value of clearance of Wet lapped bagasse pulp for the period July 2000 to December 2001 under Rule 57AD of the Central Excise Rules, 1944 and Rule 6(3)(b) of CENVAT Credit Rules, 2001. It has also proposed imposition of penalty along with interest. The adjudicating authority dropped the proceedings.
4. On perusal of the impugned order, we find that the respondents had reversed the credit attributable to inputs used in the manufacture of wet lapped chemical bagasse pulp removed during the material period and thereafter, they started maintaining separate accounts of inputs used in the exempted final product. We find that the Honble Karnataka High Court in the cases of CCE Vs. Himalaya Drug Company 2011 (271) ELT 350 (Kar.) and CCE Vs. Kudremukh Iron & Steel Co. Ltd. 2011 (271) ELT 172 (Kar.) held that common inputs used in the manufacture of dutiable and exempted final products, proportionate credit to use of inputs in exempted products is reversed, there is no requirement to reverse 8% of the price of the exempted goods, even if they had not maintained separate accounts by them. We have also noticed that Rule 57AD and Rule 6 was retrospectively amended by Finance Act, 2010 and once the CENVAT credit taken is reversed there is no liability to pay the amount of 8% of the price of the exempted goods.
5. In view of the above discussion, we do not find any merit in the appeal filed by Revenue. Accordingly, the impugned order is upheld and the appeal filed by the Revenue is rejected.
(Operative portion of the order was pronounced
in open court on 29.5.2014)
(R. PERIASAMI) (P.K. DAS)
Technical Member Judicial Member
Rex
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