2018 (9) TMI 245 – CESTAT HYDERABAD – TMI – CENVAT Credit – reversal of credit on inputs which went into generation of exempted products – SCN alleges that they have not reversed the input service credit which has gone into production of several exempted products – Rule 6(3)(i) of CENVAT Credit Rules, 2004 – Held that:- Of these products, bagasse have already been held to be just waste and not an exempted product requiring reversal of CENVAT credit – There are also other products with respect to which the appellant claims that they have already reversed the CENVAT credit such as on electricity – There are products such as organic manure which the appellant claims to have cleared on payment of duty.
–
Therefore, the proper course of action is to remand the matter back to the original authority to examine the claims of the appellant in respect to each product and re-determine the amount of duty, if any, to be recovered from them after following principles of natural justice – appea
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
inputs which went into generation of exempted products like power, Bagasse etc. but they have not reversed proportionate credit taken on input services going into manufacture of dutiable and final products as required under Rule 6 of CENVAT Credit Rules, 2004. Therefore, show cause notices were issued to the appellant asking them as to why an amount of ₹ 11,36,953/- being the credit on input services which has gone into exempted products should not be recovered from them under Sec.11A of the Central Excise Act read with Rule 14 of CENVAT Credit Rules, 2004. They were also asked as to why interest should not be demanded from them and a penalty should not be imposed on them under Sec.11AC of the Central Excise Act read with Rule 15(2) of the CENVAT Credit Rules, 2004. The lower authority confirmed the demands with interest and imposed penalty as proposed. The appellant s appeals to the first appellate authority have been rejected and hence, these appeals are filed. As far as the a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tillery division which distils the molasses produced in the sugar division into Ethyl alcohol. Part of the Ethyl alcohol is denatured and sold as denatured spirit on payment of Central Excise duty and part of the Ethyl alcohol is not denatured and is sold as such without payment of Central Excise duty (Ethyl alcohol which is not denatured is liable to State Excise duty). The Press Mud which is generated in the sugar unit is further processed by adding spent wash generated during the manufacture of Ethyl alcohol and is converted into organic manure which is sold on payment of duty. Another by-product of the rectified spirit is fusel oil which is also cleared on payment of Central Excise duty. Besides, they also have a trading division in which they trade fertilizers. It has been alleged in the show cause notice and upheld in the Order-in-Original and Order-in-Appeal that they failed to maintain separate accounts for availment of credit on input services in respect of dutiable and exempt
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e extended period of limitation is not invokable as there was no fraud, collusion, wilful misstatement or suppression of facts on their part and they have not contravened any provisions of Act or Rules made there under with intent to evade payment of duty. Therefore, the extended period of limitation does not apply at all and neither does the demand sustained. 5. Learned Counsel took the Bench through the annexures to the show cause notice and submits that the calculations made in the show cause notice are incorrect because some products have been treated as exempted products in the show cause notice but are dutiable. Bio-earth/organic manure, fusel oil are liable to payment of duty and are being cleared on payment of duty. Therefore, the question of reversal of credit on this amount does not arise. In respect of rectified spirit, he concedes that they are liable to reverse credit of input services to the extent the rectified spirit has been cleared as such without payment of duty but
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ed not be reversed on the inputs which have gone into the production of this press mud. They relied on their own case in Final Order No.A/30437/2017 in Appeal No. E/30716/2016, in which the demand of interest on delayed payment of duty on molasses, was set aside. The learned departmental representative reiterated the arguments made in the Order-in-Original and Order-in-Appeal and submits that the appellant is liable to reverse the credit on the input services which have gone into the exempted products. 6. I have carefully considered the arguments on both sides. The show cause notice alleges that they have not reversed the input service credit which has gone into production of several exempted products. Of these products, bagasse have already been held by the Supreme Court to be just waste and not an exempted product requiring reversal of CENVAT credit. There are also other products with respect to which the appellant claims that they have already reversed the CENVAT credit such as on e
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =