COMMISSIONER OF CENTRAL EXCISE Vs. CESTAT

JUDGEMENT

(1.) The Revenue is on appeal as against the order of the Customs, Excise and Service Tax Appellate Tribunal, Chennai passed in Final Order No. 1219/2007, dated 27-9-2007 2008 230 ELT 126 . Though notice was served as early as on 21-5-2008, there is no appearance either in parson or through counsel on behalf of the assessee. After hearing the learned standing counsel for the appellant and after going through the records, the present judgment is being passed. The above appeal was admitted on the following substantial question of law:--

(2.) The assessee is engaged in the manufacture of aerated waters falling under Chapter sub-heading 2202.02 of the Central Excise Tariff Act, 1985. They also manufactured 'Slice' a fruit pulp based soft drink/fruit juice based soft drinks falling under Chapter sub-heading 2202.40, which was fully exempted from payment of duty under Notification No. 6/2002 : ,.E., dated 1-3-2002. The assessee availed Canvat credit on the inputs of bottle 'plastic crates' used for packing and distribution of their final products. Apart from that, they also availed Cenvat credit on 'furnace oil' used in the manufacture of their final products.

(3.) Admittedly, furnace oil was used in the manufacture of both dutiable and exempted final products. As per Rule 6(2) of Cenvat Credit Rules, 2004, as amended by Notification No. 27/2005 : ,.E. (NT.), dated 16-5-2005, in order to avail Cenvat credit, separate accounts have to be maintained in respect of inputs used in the manufacture of both dutiable as well as exempted final products. In the absence of maintenance of such separate accounts, as per Rule 6(3)(b) of Cenvat Credit Rules, 2004, the assessee is liable to pay 10% of the sale of price of 'Slice' cleared during the material period. Considering this, show cause notice was issued by the Adjudicating Authority covering the period from 1-10-2004 to 30-9-2005 in terms of Explanation II to Rule 6(3)(c) of the Cenvat Credit Rules, 2004 r/w Rule 14 of Cenvat Credit Rules, 2004 and Section 11A of the Central Excise Act, 1944. After due process of the notice, a demand was raised, along with interest payable by the assessee. Penalty of Rs. 20 lakhs was also imposed under Rule 15(1) of the Cenvat Credit Rules, 2004 (hereinafter shortly referred to as 'CCR, 2004').