Cenvat

CEstat, Chennai bench

Bonfiglioli Transmissions (P.)Ltd.

v.

Commissioner of Central Excise

p.g. chacko, judicial member

and p. karthikeyan, technical member

FINAL ORDER NO. 1353/07

STAY ORDER NO. 1099/07

E/PD/279/2007 AND E/456/2007

November 13, 2007

Rule 6 of the Cenvat Credit Rules, 2004 - Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted service - Period 1-6-2001 to 30-10-2006 - Assessee was engaged in manufacture of ‘gear motor assembly’ - Assessee supplied said product to a company without payment of duty by virtue of Notification No.3/2001/CE, 6/2002-CE and 6/2006-CE as said company used some in manufacture of windmills - Assessee had also supplied said products to other parties on payment of duty - Assessee did not maintain separate accounts in respect of inputs intended for use in manufacture of exempted final product and those intended for use in manufacture of dutiable final product, however, paid duty on sale price of exempted goods in terms of rule 6(3) - Department took view that, in terms of rule 6(1) assessee ought not to have taken Cenvat Credit of CVD paid on imported components/parts which were used in manufacture of gear motor assembly supplied to ‘N’ Ltd., said company - Accordingly duty was demanded along with penalties - However, instant tribunal in other similar cases had held that where a manufacturer of final product has not opted to maintain separate inventory and accounts in respect of inputs intended to be used in manufacture of dutiable final product and those intended to be used in manufacture of exempted final product and has opted to pay to revenue such amount (being a percentage of sale price of exempted goods) as prescribed under sub-rule (3) of rule 6, it shall not be necessary for him to reverse any cenvat credit taken on inputs which were used in the manufacture of exempted final product - Whether in view of above holding of Tribunal impugned order was to be set aside - Held, yes [Para 5]

Circulars & Notifications

Notification No.3/2001-CE, 6/2002-CE and 6/2006-CE.

FACTS

The assessee was engaged in the manufacture of ‘gear motor assembly’. During the period 1-6-2001 to 30-10-2006, it supplied the said product to ‘N’ Ltd., without payment of duty by virtue of Notification Nos. 3/2001 - CE, 6/ 2003-CE and 6/2006-CE as the said company used the goods in the manufacture of windmills. During the same period, gear motor assembly was also supplied by assessee to other parties on payment of duty. The assessee did not maintain separate accounts in respect of inputs intended for use in the manufacture of exempted final product and those intended for use in the manufacture of dutiable final product. It paid 8 per cent / 10 per cent of the sale price (including taxes etc.) of the exempted goods in terms of rule 6 (3). The department took the view that, in terms of rule 6(1) the assessee ought not to have taken cenvat credit of the CVD paid on the imported components/parts which were used in the manufacture of the gear motor assembly supplied to ‘N’ Ltd. Accordingly the Commissioner passed impugned order confirming demand of duty along with interest and penalties on assessee.

HELD

The instant Tribunal had held that where a manufacturer of final product has not opted to maintain separate inventory and accounts in respect of inputs intended to be used in manufacture of dutiable final product and those intended to be used in the manufacture of exempted final product and has opted to pay to the revenue such amount (being a percentage of the sale price of the exempted goods) as prescribed under sub-rule (3) of rule 6, it shall not be necessary for him to reverse any cenvat credit taken on inputs which were used in the manufacture of the exempted final product. [Para 4]

The impugned order was to be set aside insofar as it relates to the period July, 2001- October, 2006 and instant appeal was to be allowed. [Para 5]