2012 (8) TMI 3 - AT - Central Excise

Waiver of pre-deposit demand is confirmed in view of the unamended provisions of Rule 6 of the CENVAT Credit Rules 2004 Cenvat credit on duty paid on inputs used in or in relation the manufacturer of goods cleared on payment of duty as well as common input services Held that - Retrospective amended provisions of Rule 6 was not taken into consideration by the adjudicating authority while passing the impugned order - matter is remanded to the adjudicating authority

Summary

Issues:
1. Application for waiver of pre-deposit of duty, interest, and penalty.
2. Interpretation of Rule 6 of the CENVAT Credit Rules 2004.
3. Retrospective amendment of Rule 6 by Finance Act 2010.
4. Consideration of retrospective amendment by adjudicating authority.
5. Decision based on unamended provisions of Rule 6.
6. Remand of the matter to the adjudicating authority for fresh consideration.

Analysis:
The appellant filed an application seeking waiver of pre-deposit of duty, interest, and penalty amounting to Rs.3,24,61,073. The demand was confirmed based on the unamended provisions of Rule 6 of the CENVAT Credit Rules 2004, which mandated a payment of 10% of the price of exempted goods if credit was availed without maintaining separate records for inputs used in the manufacture of exempted and excisable goods. The appellant argued that the provisions of Rule 6 were retrospectively amended by the Finance Act 2010, allowing for the reversal of credit proportionate to the input services used in relation to exempted goods. The appellant contended that despite the amendment, the adjudicating authority did not consider it, and they had already reversed a portion of the credit in compliance with the retrospective amendment.

The Revenue supported the adjudicating authority's decision, citing a judgment by the Bombay High Court that upheld the demand based on Rule 6. However, the Tribunal noted that the demand was confirmed under the unamended provisions of Rule 6, which had been retrospectively amended by the Finance Bill 2010. The amended provisions, inserted after sub-rule (6) of Rule 6, allowed manufacturers to pay an amount equivalent to the CENVAT credit attributable to inputs used in exempted goods, with interest, for the period from September 10, 2004, to March 31, 2008. The Tribunal observed that the adjudicating authority did not consider the retrospective amendment, necessitating a re-examination of the matter.

Consequently, the Tribunal set aside the impugned order, waived the pre-deposit of duty, interest, and penalty, and remanded the matter to the adjudicating authority for a fresh decision after providing an opportunity of hearing to the appellant. The appeal was disposed of by way of remand, emphasizing the need for reconsideration in light of the retrospective amendment of Rule 6 of the CENVAT Credit Rules 2004.