9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 54 - AT - Central ExciseCENVAT credit - Goods become exempted after taking cenvat credit - Demand of 8% of the price of exempted goods under Rule 6(3) - Revenue contends that if any credit of duty paid on the inputs used in the manufacture of dutiable final product is taken and utilized then it cannot be got reversed or denied on the ground that such final product became exempted subsequently - Held that - At the time of taking of the credit, the goods manufactured by the appellant were dutiable and, therefore, the appellant has rightly taken the credit. However, at the time of clearance of the goods, the goods were exempt and, therefore, the appellant reversed the credit attributable to the inputs contained in the exempted final products. This reversal done by the respondent is perfectly legal - law itself was amended retrospectively vide Finance Act, 2010 providing for reversal of the credit attributable to the inputs contained in the exempted final products - Following decision of Chandrapur Magnet Wires (P) Ltd. vs. Commissioner of Central Excise 1995 (12) TMI 72 - SUPREME COURT OF INDIA - Decided against Revenue.
Issues:
Appeal against Order-in-Appeal confirming CENVAT credit demand, interest, and penalty - Interpretation of Rule 12 of CENVAT Credit Rules 2002 and Section 11A of the Central Excise Act, 1944 - Applicability of exemption on final product becoming exempted subsequently - Reversal of CENVAT credit on inputs used in manufacture of exempted goods - Retrospective amendment of CENVAT Credit Rules by Finance Act, 2010. Analysis: The appeal before the Appellate Tribunal CESTAT MUMBAI challenged the Order-in-Appeal by the Commissioner of Central Excise & Customs (Appeals), Aurangabad, confirming a demand for CENVAT credit, interest, and imposing a penalty. The impugned order was set aside by the appellate authority, leading to the Revenue appealing the decision. The appellant contended that as per Tribunal decisions, once duty paid on inputs for manufacturing dutiable final products is utilized, it cannot be reversed even if the final product becomes exempted later. Rule 57CC at the relevant time did not exempt an assessee from making payment if credit was earlier availed on inputs used in exempted goods. The appellant argued the impugned order was legally unsustainable. On the other hand, the respondent, a manufacturer of pharmaceutical products, explained that they initially took CENVAT credit on inputs when manufacturing goods subject to duty. Subsequently, the same product became exempt from excise duty. Upon clearance of exempted goods, they reversed the proportionate CENVAT credit related to inputs used in manufacturing those goods. The respondent cited the retrospective amendment in the CENVAT Credit Rules by the Finance Act, 2010, which allowed for credit reversal on inputs used in exempted products. After considering both arguments, the Tribunal noted that the appellant rightfully took credit when manufacturing goods subject to duty. However, upon the goods becoming exempt, the appellant correctly reversed the credit linked to inputs in the exempted final products. This action was deemed legally valid. Referring to the Supreme Court's decision in Chandrapur Magnet Wires (P) Ltd. vs. Commissioner of Central Excise 1996 (81) ELT 03 (SC), the Tribunal supported the respondent's position. Additionally, the Tribunal acknowledged the retrospective amendment by the Finance Act, 2010, which mandated the reversal of credit related to inputs in exempted final products. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it, also disposing of the Cross-objection.
|
