2011 (8) TMI 594 - HC - Central Excise

Cenvat Credit - bifurcation of cenvat credit - Cenvat credit on inputs which are not dutiable was the center of controversy - Retrospective amendments provided a response from the Commissioner within two months from the date of application and payment of duty short paid with interest within 10 days from the Commissioner s communication - Held That - when the petitioners have made a prima facie case of having paid the the duty with interest as per their calculation and also of having bifurcated the Cenvat credit attributable to exempt and non-exempt goods as suggested by the Commissioner in the impugned order, we are of the opinion that the application is required to be reexamined.

Summary

Issues involved:
Challenge to order by Commissioner of Central Excise regarding availing Cenvat credit on inputs not dutiable, statutory amendments by Finance Act 2010, rejection of application by Commissioner due to lack of necessary documents, dispute over bifurcation of credit, petitioners' contention of supplying required documents, need for reexamination of application.

Analysis:

The judgment involves a challenge to an order passed by the Commissioner of Central Excise regarding the availing of Cenvat credit on inputs not dutiable by the petitioners, who are manufacturers. The dispute arose when the Department issued a show cause notice during the pendency of proceedings, and statutory amendments by the Finance Act 2010 allowed manufacturers to pay the amount towards input credit attributable to exempted goods with retrospective effect. The petitioners applied to the Commissioner within the prescribed time limit and reversed the credit as per their calculation.

The Commissioner rejected the application mainly on two grounds: inability to determine the exact figures of Cenvat credit for exempted goods and failure to supply necessary documents within the stipulated time frame. The petitioners contended that they had provided all required documents and accounts. The court noted that the rejection was not based on the merits of the case but on procedural grounds, emphasizing the importance of supplying necessary documents promptly.

In light of the circumstances, the court decided that the application needed to be reexamined by the authorities. The petitioners claimed to have already adopted the bifurcation formula suggested by the Commissioner and were willing to provide any additional information required. Despite acknowledging the urgency and time limits prescribed by the statutory provisions, the court found it necessary to allow the petitioners an opportunity to address the concerns raised by the Commissioner.

Therefore, the court quashed the impugned order, revived the petitioners' application, and directed the Commissioner to communicate any further documents/information required promptly. The petitioners were instructed to provide the necessary information within the specified timeline, following which the Commissioner was to pass a fresh order in accordance with the law within a reasonable timeframe. The judgment concluded by disposing of the petition accordingly, ensuring a fair reexamination of the application.