2011 (3) TMI 42 - AT - Central Excise

Rule 6 of CENVAT Credit- The appellant had cleared exempted goods by utilising end units on which CENVAT credit was availed, hence liable to pay 8% or 10% as the case may be, as the value of exempted finished goods - As per the retrospective amendment of Rule 6 provides for reversal of CENVAT credit attributable to the inputs which were utilised in the manufacturing of finished products, discharging the interest liability thereof by adducing a certificate of a chartered accountant - The appeal is allowed by way of remand.

Issues:
1. Stay petition for waiver of pre-deposit of the amount confirmed against the appellant.
2. Interpretation of Rule 6 of CENVAT Credit Rules regarding payment of 8% or 10% of the value of finished goods for availing CENVAT credit on common inputs.
3. Retrospective amendment to Rule 6 of CENVAT Credit Rules and its implications on the case.

Issue 1: Stay petition for waiver of pre-deposit:
The appellant filed a stay petition seeking the waiver of pre-deposit of Rs.4,31,500/- along with interest and penalty adjudged by the adjudicating authority and upheld by the Commissioner (Appeals). The Tribunal found that the appeal itself could be disposed of at this stage. After allowing the application for waiver of pre-deposit, the Tribunal proceeded to take up the appeal for disposal, ultimately allowing the appeal by way of remand. The stay petition was also disposed of in this process.

Issue 2: Interpretation of Rule 6 of CENVAT Credit Rules:
The core issue in this case revolved around the payment of 8% or 10% of the value of finished goods for availing CENVAT credit on common inputs used by the appellant. The appellant had cleared exempted goods by utilizing end units on which CENVAT credit was availed, making them liable to pay a certain percentage as the value of exempted finished goods. The Tribunal noted that this issue was now covered by a retrospective amendment to Rule 6 of CENVAT Credit Rules. The amendment required the reversal of CENVAT credit attributable to inputs used in manufacturing finished products, along with discharging the interest liability by providing a chartered accountant certificate and representing the case before lower authorities. Consequently, the Tribunal set aside the orders of the lower authorities and remitted the matter back to the adjudicating authority for reconsideration in light of the retrospective amendment to Rule 6. The appeal was allowed based on this remand.

Issue 3: Retrospective amendment to Rule 6 of CENVAT Credit Rules:
The Tribunal highlighted the significance of the retrospective amendment to Rule 6 of CENVAT Credit Rules introduced by the Finance Act, 2010. This amendment mandated the reversal of CENVAT credit linked to inputs utilized in manufacturing finished products and the fulfillment of interest liability requirements through a chartered accountant certificate. The Tribunal emphasized the need for the adjudicating authority to delve into this factual matrix in light of the retrospective amendment. Consequently, the Tribunal allowed the appeal by remanding the case for further consideration by the adjudicating authority, directing a reassessment based on the amended Rule 6 provisions.

This judgment by the Appellate Tribunal CESTAT, Mumbai addressed the stay petition for the waiver of pre-deposit, the interpretation of Rule 6 of CENVAT Credit Rules concerning the payment percentage on finished goods, and the implications of the retrospective amendment to Rule 6. The Tribunal's decision to remand the case for reconsideration in light of the amended Rule 6 underscored the importance of complying with the revised provisions and ensuring proper assessment of CENVAT credit utilization in manufacturing processes.

← Previous Next →