2012 (6) TMI 171 - AT - Central Excise

Demand imposed on ground that assessee has not reversed proportionate cenvat credit attributable to exempted goods cleared whereas assessee contended reversal of proportionate cenvat credit with interest attributable to the exempted goods cleared - period involved 2006-07 to 2007-08 - Held that - If the assessee has paid amount of cenvat credit proportionate to the inputs attributable to the exempted goods cleared from the factory premises, that is sufficient for the purpose of the provisions of Rule 6 of Cenvat Credit Rules, 2004. In view of the retrospective amendments in the provisions of Rule 6, amount already reversed by the appellant as proportionate inputcenvat credit attributable to the exempted goods cleared from the factory premises, should be enough compliance of the law. Order set aside - Decided in favor of assessee

Summary

Issues:
Stay petition for waiver of pre-deposit of penalty amount imposed by lower authorities. Interpretation of Rule 6 of Cenvat Credit Rules, 2004 regarding payment of cenvat credit on service tax for exempted goods.

Stay Petition for Waiver of Pre-deposit:
The appellant filed a stay petition seeking waiver of the penalty amount imposed by the adjudicating authority and upheld by the first appellate authority. The presiding judge, after hearing both sides, decided to dispose of the appeal itself due to the narrow scope of the issue. The judge allowed the application for waiver of pre-deposit and proceeded to take up the appeal for final disposal.

Interpretation of Rule 6 of Cenvat Credit Rules, 2004:
Upon reviewing the records, it was found that the appellant had availed cenvat credit on service tax paid by various providers, utilizing it for discharging duty liability on manufactured goods, including exempted ones. The dispute arose when the authorities demanded an amount equivalent to a percentage of the value of exempted goods cleared from the factory premises, despite the appellant's claim of having already reversed the proportionate cenvat credit with interest for exempted goods. The judge referred to previous bench decisions and concluded that the appellant's reversal of cenvat credit for exempted goods sufficed as compliance with Rule 6 of the Cenvat Credit Rules. Citing retrospective amendments, the judge set aside the demand for the penalty amount, interest, and confirmed the appellant's compliance with the law. The judge's decision was supported by previous rulings in cases involving other entities.

This judgment from the Appellate Tribunal CESTAT, Ahmedabad, addressed the issues of a stay petition for waiver of pre-deposit of penalty and the interpretation of Rule 6 of Cenvat Credit Rules, 2004 regarding cenvat credit on service tax for exempted goods. The presiding judge allowed the waiver of pre-deposit and ruled in favor of the appellant, stating that the reversal of cenvat credit for exempted goods fulfilled the legal requirements.