2012 (8) TMI 658 - AT - Central Excise

Cenvat credit on the inputs used in or in relation to the manufacture of dutiable as well as the exempted final product - non-maintenance of separate set of accounts or records - assessee contended proportionate reversed of credit and application of retrospective amendment of Cenvat Credit Rule 6(3) by Finance Act, 2010 - Held that - We set aside the impugned order and remit back the matter to the Commissioner Adjudication for deciding the matter afresh after taking into account evidence relating to cenvat credit and also making assessment of interest payable.

Summary

Issues:
1. Availing cenvat credit on dutiable and exempted final products without maintaining separate inventory.
2. Demand raised by the Department under Rule 6(3) of Cenvat Credit Rules.
3. Applicability of retrospective amendment in Cenvat Credit Rules by Finance Act, 2010.
4. Remand of the matter for de novo adjudication.

Analysis:
1. The appellant, engaged in manufacturing pharmaceutical products, availed cenvat credit under Rule 3 of Cenvat Credit Rules, 2002, without maintaining separate inventory for dutiable and exempted final products. The Department raised a demand of Rs.65,96,620/- for not paying an amount equal to 8% of the value of the exempted final product cleared during a specific period. The Commissioner confirmed the duty demand and imposed a penalty of Rs.50,000/-.

2. The appellant contended that they availed cenvat credit on all inputs upon receipt, later debiting the credit when used for exempted products. They argued against the Department's demand under Rule 6(3) of the Cenvat Credit Rules, citing the retrospective amendment by the Finance Act, 2010. The appellant referred to the judgment of the Gujarat High Court in Shree Rama Multi Tech Ltd. vs. UOI to support their position.

3. The Department, represented by the learned DR, acknowledged the retrospective amendment in the Cenvat Credit Rules by the Finance Act, 2010. Consequently, they agreed that the matter should be remanded back to the adjudicating authority for fresh consideration in light of the amended Rule 6 of the Cenvat Credit Rules.

4. The Tribunal, considering the retrospective amendment and the concession made by the Revenue, set aside the original order and remitted the matter back to the Commissioner for de novo adjudication. The Commissioner was directed to reevaluate the evidence related to cenvat credit and determine the interest payable, ensuring compliance with the amended Rule 6 of the Cenvat Credit Rules. The appeal was disposed of accordingly.