Judgment:
P. R. Chandrasekharan
1. Both the appeals and stay applications are directed against order-in-appeal No. Th-I/RKS/20-21/2012 dated 09/02/2012 passed by Commissioner of Central Excise (Appeals), Mumbai.
2. The appellant, M/s.Shree Shankar Mills Ltd., Thane, are textile processors and they availed the benefit of notification No.30/2004 dated 09/07/2004, which provides exemption on processed manmade fabrics and cotton fabrics from duty subject to the condition that no Cenvat credit is availed on the inputs used in the manufacture of finished goods. They also cleared processed fabrics on payment of duty under Notification No.29/2004 dated 09/07/2004, which provides for a concessional rate of duty and also allows the processor to avail Cenvat credit of duty paid on inputs used in the manufacture of processed fabrics. Show-cause notices were issued to the appellants with regard to the claim for exemption under Notification 30/2004 on the ground that the appellant did not maintain separate records showing the receipt, inventory and consumption of inputs used in the manufacture of exempted fabrics and dutiable fabrics separately. The duty demand was confirmed for an amount of Rs.2,98,715/- and Rs.2,40,766/- against the appellants towards Cenvat credit wrongly availed vide order dated 21/08/2006. The appellant preferred an appeal before the Commissioner (Appeals) and also produced copies of the records maintained by them to show that they have not availed any Cenvat credit on the inputs used in the manufacture of exempted processed fabrics. Their appeal came to be dismissed on the ground that the lower authorities were not satisfied with the accounts maintained by the party and, therefore, the appellate authority is also not satisfied. Hence, the appellant is before me.
3. The Ld. Counsel for the appellant submits that they have maintained accounts of grey fabrics lot number-wise which clearly indicates which lot of grey fabrics has gone in the manufacture of dutiable fabrics which lot of grey fabrics have gone into the manufacture of exempted grey fabrics. He further submits in respect of other inputs such as dyes and chemicals etc., they have not availed any Cenvat credit for the month of August whereas for the month of July whatever Cenvat credit was availed has been reversed. In these circumstances, it cannot be said that they have availed Cenvat credit as also full duty exemption simultaneously and therefore, the demands are not justified.
4. The Ld. AR reiterates the findings of the lower authorities.
5. I have carefully considered the rival submissions. The issue lies in a very narrow compass. The appellant has maintained records regarding availment of Cenvat credit and also the receipt, inventory and issue of inputs used in the manufacture of dutiable as well as exempted processed fabrics. Inasmuch as they have reversed the Cenvat credit or has not availed Cenvat credit in respect of chemicals, dyes, etc. which fact can be verified from the records, the availment or otherwise of the Cenvat credit in respect of these inputs can be easily verified. As regards the grey fabrics, since the register has been maintained lot wise it is possible to verify which lot has gone into the manufacture of dutiable fabrics and which lot has been gone into the exempted fabrics by examination of the records maintained by the assessee in consultation with them. This could have been done by the original adjudicating authority himself which has not been done in the instant case. The only reason for confirmation of demand is non-satisfaction of the Range Superintendent of the records maintained by the assessee. This cannot be a valid ground for confirmation of duty. Accordingly, I set aside the impugned order and remand the case back to the original adjudicating authority for verification of the records maintained by the assessee and then arrive at a finding as to whether the appellant has availed the benefit of exemption correctly or not. The appellant is also directed to co-operate with the department in the submission of all relevant records and explaining their position. Thereafter, the original adjudicating authority shall pass the order as to the entitlement of the appellant in respect of the two notifications.
6. Thus, the appeals are allowed by way of remand. Stay applications are also disposed in the above manner.