Confirmation of excise duty at 8% or 10% of value exempted goods without merit: CESTAT allows appeal [Read Order]

The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal by Ref Cem Industries (the appellant) against the order issued by the Commissioner of Central Excise (the respondent) demanding excise duty at 8% or 10% of value-based exemption received under notification number 08/2003-CE and Cenvat credit.

Ref Cem Industries was engaged in the manufacture of branded and unbranded fire bricks falling under the Central Excise Tariff but they have been availing benefit value-based exemption under notification no. 08/2003-CE and Cenvat credit. Ref Cem Industries had not maintained separate accounts for exempted and dutiable final products as required under rule 6 of Cenvat credit rules, 2004. They were thus asked to pay Central Excise duty at the rate of 8% or 10% of the value of exempted goods.

The counsel appearing on behalf of Ref Cem Industries contented that the simple issue involved in the matter was that they have availed credit on common inputs of pet coke, furnace oil, and kiln bauxite. He also pointed out that they had submitted a Chartered Engineer certificate in this regard and the department had issued the impugned order without verifying the fact whether all inputs used by them were commonly used for both dutiable and duty-free products.

He further submitted that the adjudicating authority had failed to take into account the Chartered Engineer certificate issued by P.P Bhadresa wherein she visited the factory premises verified the manufacturing process and certified the consumption of pet coke for different types of bricks. He also claims that they have already reserved the Cenvat credit availed by them and have also paid more than proportionate credit and interest for the same.

The counsel appearing on behalf of the revenue reiterated the findings in the impugned order.

The two-member bench consisting of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) after hearing both sides supported the submissions by Ref Cem Industries and held that the revenue had not verified the facts of the Chartered Engineer certificate and simply proceeded in confirming the duty at the rate of 8% or 10% of the value of exempted goods which is not sustainable as once the Cenvat credit availed has been reversed, it can be held that they had not taken credit as per the Supreme Court Judgement in the case of Chandpur Magnet Wires (P) Ltd vs Collector of C.Excise, Nagpur.

The bench also took note of various decisions of the Tribunal regarding the same issue; Welspun Corp. Ltd vs. CCE. The bench’s final decision was that the impugned order was without any merit and the appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates