2012 (8) TMI 321 - 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 attributable to the exempted goods cleared - period involved 01.01.2005 to 31.10.2005 - Notification No.6/2002-C.E. - Held that - In view of the retrospective amendments in the provisions of Rule 6, amount already reversed by the appellant as proportionate input cenvat 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:
1. Availing CENVAT Credit on common inputs used for manufacturing dutiable and exempted goods.
2. Dispute regarding payment equivalent to 10% of value of exempted goods cleared.
3. Interpretation of Rule 6 of CENVAT Credit Rules, 2004.
4. Retrospective amendment to Rule 6.
5. Compliance with provisions of Rule 6.

Analysis:
1. The appeal was filed against Order-in-Original No. 03/Demand/ Daman/2006, concerning the appellant's availing of CENVAT Credit on common inputs used for manufacturing both dutiable and exempted goods during a specific period.
2. The Revenue contended that the appellant should have paid an amount equivalent to 10% of the value of exempted goods cleared from the factory premises, leading to the issuance of a Show Cause Notice with confirmed amounts, interest, and penalties.
3. The appellant argued that they had reversed the CENVAT Credit attributable to inputs used in manufacturing exempted products, citing a previous order by the Bench and a retrospective amendment to Rule 6 of CENVAT Credit Rules, 2004, as supporting their case.
4. After considering both sides' submissions, the Tribunal found that the appellant's action of reversing the CENVAT Credit for inputs used in manufacturing exempted goods was in compliance with the provisions of Rule 6. The Tribunal noted that a previous order by the Bench and the retrospective amendment to Rule 6 supported the appellant's position.
5. Consequently, the Tribunal held that the impugned order was not sustainable and set it aside, allowing the appeal in favor of the appellant based on the compliance with Rule 6 and the retrospective amendment.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, legal interpretations, and the Tribunal's decision, providing a comprehensive understanding of the case.