MAHINDRA & MAHINDRA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, NAGPUR
LAWS(CE)-2015-7-33
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 16,2015

MAHINDRA AND MAHINDRA LTD. Appellant
VERSUS
Commissioner Of Central Excise, Nagpur Respondents


Referred Judgements :-

CCE V. SABOO ALLOYS PVT. LTD. [REFERRED TO]
CCE V. SABOO ALLOYS PVT. LTD. [REFERRED TO]
R.R. PAINTS PVT. LTD. V. CCE,MUMBAI [REFERRED TO]
AMRIT PAPER VS. COMMISSIONER OF CENTRAL EXCISE [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. NICHOLAS PIRAMAL INDIA LTD [REFERRED TO]
Commissioner of Central Excise., Bangalore-II VS. Gokaldas Intimate Wear [REFERRED TO]
COMMISSIONER OF C. EX. VS. ASHOK IRON & STEEL FABRICATORS [REFERRED TO]


JUDGEMENT

P.K.SINGH,J - (1.)BRIEF facts of the case are that the appellant is engaged in the manufacture of tractors and parts thereof. They were clearing such goods on payment of duty also availing cenvat credit for the inputs used in the manufacture of such goods. Vide Notification No. dated 9.7.2004, tractors falling under Chapter Heading 8701 became exempt from payment of central excise duty.
(2.)Thus from 9.7.2004 onwards they were not required to pay central excise duty on the agricultural tractors so cleared. In terms of Rule 6(1) cenvat credit is not allowed on inputs which are used in the manufacture of exempted goods. Further, in terms of Rule 6(2) if a manufacturer is manufacturing dutiable as well as exempted goods, he is required to maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final product and the quantity of inputs meant for use in the manufacture of exempted goods and take credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. Rule 6(3) further provides that if the appellant is not maintaining separate account, he shall pay an amount equal to 8% of the total price, excluding sales tax and other taxes if any paid on such exempted goods.
The appellant was not in a position to immediately segregate the records of inputs which go into the production of exempted goods and which go into the dutiable goods. They therefore vide their letter date 14.7.2004 informed the Revenue that they are not in a position to immediately segregate the inputs which will go into the production of the exempted goods and which will go into the production of dutiable goods and therefore they will be paying an amount of 8% on the price of the exempted tractors as per the provisions of Rule 6(3)(b) of the Cenvat Credit Rules. They also informed that they are taking steps so that they are in a position to segregate the inputs which go into the exempted goods and which go into the dutiable goods and as soon as their system is in place, they will switch over to other scheme viz. Rule 6(2). The appellant vide letter dated 31.8.2004 informed that w.e.f. 1.9.2004 they will not be availing cenvat credit on any input which is used in the manufacture of exempted tractors. Further, hydraulics which is an integral part of tractor and is otherwise chargeable to duty, they will be availing the credit of inputs used in the manufacture of hydraulic unit. Further in respect of such hydraulic unit which will be used in the exempted tractors, they will reverse the credit of duty on inputs used in such hydraulics.

(3.)OTHER hydraulics would be cleared on payment of duty. They also informed vide the said letter that the department shall be informed about the stock of tractors as also the inputs lying in stores, work in progress and in finished goods as on 31.8.2004. Thereafter on 24.9.2004 they computed the total amount of cenvat credit availed by them on various inputs lying in stores, work in progress as also used in the finished goods which were available as on 31.8.2004 and reversed the credit (approximately Rs. 4.98 crores) by partly paying from the credit available and partly paying by cash.
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