C.L. Mahar ORDER
Anil Choudhary, Member (J)
1. The appellant is a manufacturer of dutiable goods-HDPE Pipes/LLDPE Pipes. PVC Moldings, fittings, etc. which are dutiable and also manufacturer of exempt products i.e. Drip Irrigation System and Sprinkler systems. The appellant was operating or keeping their cenvat account under Rule 6(2) of Cenvat Credit Rules, maintaining separate accounts of inputs and input services used in dutiable and exempted goods. The officers of the Department visited the appellant on 1.4.2017. During the verification of the goods, it appeared that the appellant had, including other goods, cleared exempted goods viz. HDPE Sprinkler and Drip irrigation System during the period April, 2015 to March, 2016 without payment of duty/amount under Rule 6(3) of Cenvat Credit Rules. Further, it appeared that the appellant is availing cenvat credit on inputs, input services and capital goods. Pursuant to investigation, it appeared that the appellant has not paid amount equivalent to 6% (reversal of credit) of the value of the exempted goods cleared during 2015-2016, as required under Rule 6(3) (1) of Cenvat Credit Rules. As per the Department, they have not kept separate records in respect of common input services used in the manufacture of exempted goods, although the appellant has opted to keep separate records. It further appeared that there is short payment/reversal of amount payable in terms of Rule 6(3)(1) for the period 2016-2017, amounting to Rs. 67,85,726/-.Further, they took wrong availment of cenvat credit of Rs. 7,52,138/- on the photocopies of the documents, during March, 2017 in contravention of Rule 9, which on being pointed out, was reversed vide RG-23-A Part -II Entry No. 2761 dated 1.4.2017.
2. Accordingly, show cause notice dated 5.5.2017 was issued proposing to demand the aforementioned amount and further, a demand of Rs. 7,52,318/- with proposal for appropriation from the amount already reversed along with interest and further, penalty was proposed.
3. Show cause notice was adjudicated on contest and the proposed demands were confirmed and appropriated as proposed. Further, equal amount of penalty was imposed for all the three proposals, under Section 11 AC read with Rule 15 of Cenvat Credit Rules. Being aggrieved, the appellant is in appeal before this Tribunal.
4. Ld. Counsel for the appellant urges that the appellant has maintained separate accounts for input as well as capital goods used for the manufacture of dutiable as well as exempted goods, since the option given on 1.07.2014. However, some inputs services, which are used commonly for dutiable as well as exempted goods, could not be maintained separately and in fact, the input services so used in the manufacture of exempted goods are nominal as compared to the dutiable goods. Such common input services used are - internet, telephone, security services, etc. Further, it is difficult to separate such services used for exempted goods. Further, the appellant was under the impression that since these services were mainly used for dutiable goods, there was no need to maintain separate accounts for these services. Further, the appellant on being so advised, reversed the proportionate credit amount with respect to such input services, before filing reply to the show cause notice. The appellant has reversed the amount of Rs. 6,94,599/- under intimation to the Adjudicating Authority. Such amount has been paid by the challan on 25.04.2018. Such reversal of cenvat credit amounts to not taking of credit, as per law laid down by the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires Vs. CCE - MANU/SC/1061/1996 : 1996 (81) ELT page 3.
5. It is further urged that for minor procedural lapse, substantial benefit c........