2008 (6) TMI 467 - AT - Central Excise

Summary

Issues: Calculation of Cenvat credit under Rule 6(3)(b) of the Cenvat Credit Rules, 2004.

Detailed Analysis:

1. The Commissioner demanded over Rs. 63 lakhs from the appellants for the period Jan'06 to June'07 under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, based on the sale price of exempted products like rectified spirit. The appellants, engaged in sugar and molasses production, were penalized for employing a formula deemed incorrect by the Commissioner.

2. The dispute centered around the calculation of "Cenvat credit attributable to molasses." The Revenue argued that it should be the net Cenvat credit, leading to the demand. The appellants, however, contended that the Rule had been amended to introduce a new formula. The correct calculation, as per the amended Rule, involves the total value of exempted goods, total value of dutiable and exempted goods, and total Cenvat credit on input services.

3. Despite doubts about whether the appellants followed the correct procedure, it was acknowledged that the formula used by the Commissioner differed from the current statutory formula. To ensure fairness, the Tribunal decided to apply the statutory formula, effective from 1-4-08, to assess the correctness of the Commissioner's decision. Consequently, a waiver of pre-deposit and a stay of recovery for the adjudged dues were granted pending further proceedings.

This judgment clarifies the application of the correct formula for determining Cenvat credit under Rule 6(3)(b) of the Cenvat Credit Rules, emphasizing adherence to the statutory provisions and ensuring consistency in calculations to avoid discrepancies and penalties.