RUCHI SOYA INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THIS appeal arises from Order -in -Original No. 13/06 dated 20.9.06 by which the Commissioner of Central Excise, Mangalore has confirmed duty amount of Rs. 84,95,66,016/ - being the 10% of the value of 314160.229 MTs of exempted goods falling under Chapter 15 of Central Excise Tariff Act 1985 cleared during the period from March 05 to January 06 under Rule 14 of Cenvat Credit Rules read with Rule (6)(3)(p) of Cenvat Credit Rules 2004 and a penalty of Rs. 1,00,000/ - under Section 11A of CE Act.

(2.) THE appellants are engaged in the manufacture of excisable goods falling under Chapter heading 3815 of CET Act 1985. The goods falling under Chapter 15 are exempted from payment of duty during the budget 2005. They availed Cenvat credit on the inputs and the input services used in the manufacture of final products. The department after scrutiny of ER returns for the months from March 05 to January 06 have observed that the assessee had availed and utilized the credit of duty on the inputs, capital goods and input services under the provisions of Cenvat Credit Rules 2004. The department was of the view that during the period March 05 to January 06, as they had cleared quantity of 314160.229 MTs of exempted goods falling under Chapter 15 of CET Act 1985 by using inputs as well as input services as they had not maintained separate records for receipts and utilization of such inputs and input services for the manufacture of dutiable and exempted goods, Therefore, it was alleged in the show cause notice that they were required to pay the amounts equal to 10% of the price excluding sales tax and other taxes payable on such goods of the exempted final products charged by the manufactures for the sale of such goods at the time of their clearance from the factory in terms of Sub -rule 6(3)(b) of Cenvat Credit Rules. The appellants denied the charge and contended that they had reversed the credit in respect of any inputs used in the manufacture of exempted goods under Chapter 30 and relied on large number of judgments to contend that once they have reversed the credit they are not required to pay 10% of the value of the exempted goods. They also contended that the show cause notice issued on 3.4.06 for the period March 05 to January 06 is clearly barred by time, as all the details had been informed to the department and there was no suppression of facts or mis -representation, mis -declaration. However, the Commissioner in his impugned order rejected all their pleas and held that they were liable to pay 10% of the value of the exempted gods as they had not maintained separate records and they had availed the entire credit. The same is challenged in this order.

(3.) THE Tribunal heard the matter in extensio and passed the interim order granting stay by Miscellaneous Order No. 54/07 dated 13.2.07. The submission of the learned senior counsel has been summarized in para 2 of the miscellaneous order which is reproduced herein below.