2014 (10) TMI 557 - AT - Central Excise

Benefit of CENVAT Credit - manufacture of exempted and dutiable finished products - contravention of the provisions of Rule 57AD of the erstwhile Rules - Held that - In the case of Burn Standard Co. Ltd. (2013 (2) TMI 35 - Madras High Court) the period of dispute was Apr. 08 to Dec. 08 under Rule 6 of the Cenvat Credit Rules. The Tribunal set aside the order and allowed the appeal by remanding the matter to the adjudicating authority to decide the matter afresh in the light of retrospective amendment to the Rules along with application filed by the assessee under Section 73 of the Finance Act, 2010. In the present case the period of dispute is March, 2000 to Jan. 01 under Rule 57CC/57AD of the erstwhile Central Excise Rules, 1944 and Revenue had not disputed the reversal of credit of ₹ 11,342/- in their grounds of appeal. - Decided against Revenue.

Summary

Issues:
1. Admissibility of Cenvat credit on exempted and dutiable finished products.
2. Alleged contravention of Rule 57AD of the Central Excise Rules.
3. Imposition of demand, interest, and penalty.

Analysis:
1. The respondent, engaged in manufacturing Fluorescent Tube Lights and General Lighting Service lamps, availed Cenvat credit benefit. A Show Cause Notice was issued alleging non-reversal of credit on inputs used in the manufacture of exempted goods, leading to a demand of Rs. 30,94,760 under Rule 57AH of the Central Excise Rules. The adjudicating authority confirmed the demand and imposed a penalty. The Commissioner (Appeals) set aside the order, prompting the Revenue to file an appeal.

2. The learned Authorised Representative argued that the respondent reversed the credit on inputs used in exempted goods, citing a decision of the Hon'ble Madras High Court. The Tribunal found that the respondent had indeed reversed a credit amounting to Rs. 11,355 prior to the Show Cause Notice. The Commissioner (Appeals) followed the decision of the Supreme Court in a similar case and dismissed the appeal filed by the Revenue. The Tribunal noted that the Revenue did not dispute the reversal of credit in their grounds of appeal, leading to the rejection of the Revenue's appeal.

3. The Tribunal emphasized that the Revenue had not demanded interest, and the argument regarding interest was not accepted at that stage. Comparisons were drawn with a previous case involving a retrospective amendment to the Rules. The Tribunal found no merit in the Revenue's appeal as the reversal of credit was not disputed and rejected the appeal accordingly.

This detailed analysis of the judgment highlights the issues of admissibility of Cenvat credit, contravention of rules, and the imposition of demand, interest, and penalty, providing a comprehensive understanding of the legal aspects involved in the case.