2015 (3) TMI 470 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - Modification of stay order - whether the appellant is required to pay 5% of the total value of the exempted product, Slice' manufactured by them in terms of provisions of Rule 6(3) of CENVAT Credit Rules 2004 since they did not maintain separate accounts in respect of inputs used by them - Held that - decision of the Tribunal in the case of Josts Engineering Co. Ltd 2013 (8) TMI 463 - CESTAT MUMBAI . As submitted by the learned counsel, in that case the period involved was subsequent to the amendment carried out in Rule 6(3A) which requires the appellant to exercise an option and follow the procedure prescribed therein if the appellant does not maintain separate accounts. In Josts Engineering Co. Ltd. case, the appellants had maintained separate accounts in respect of inputs but by mistake they did not maintain separate accounts in respect of input services. When it was pointed out to them, they reversed the entire credit attributable to dutiable as well as exempted products taken by them in respect of input services. Taking this into consideration and taking the fact that appellant had maintained separate accounts in respect of inputs, the Tribunal came to the conclusion that the reversal of entire credit would be sufficient and it amounts to non-availment of credit and when credit is not availed in respect of input services at all, the provisions of Rule 6(3)(i) is not attracted. We find that the decision would be applicable to the facts of this case also. However since the Tribunal took the view in view of the fact that appellant had reversed the entire credit taken by the appellant therein and the credit was reversed where separate accounts was not maintained i.e. mainly input services, we consider that in this case also the appellant would be required to reverse the entire amount of CENVAT credit taken in respect of common input. Needless to say if an amount has already been paid, that can be deducted from the amount payable. Accordingly, the appellant is directed to reverse that credit within 8 weeks - Partial stay granted.

Summary

Issues involved:
1. Whether the appellant is required to pay 5% of the total value of the exempted product 'Slice' manufactured by them in terms of provisions of Rule 6(3) of CENVAT Credit Rules 2004 due to not maintaining separate accounts for inputs used from February 2010 to May 2010.

Analysis:
The Tribunal had initially directed the appellants to deposit an amount and later rejected their modification application. The High Court directed the Tribunal to allow a personal hearing for the modification application. The main issue was whether the appellant needed to pay 5% of the total value of the exempted product due to not maintaining separate accounts for inputs used. The appellant argued for a complete waiver based on a previous Tribunal decision. The Tribunal analyzed a similar case where separate accounts were not maintained for input services, leading to the reversal of entire credit. The Tribunal concluded that in this case, the appellant must reverse the entire amount of CENVAT credit taken in respect of common input, with a provision to deduct any previously paid amount. The appellant was directed to comply within 8 weeks, with a waiver of pre-deposit and stay against recovery during the appeal process.

This detailed analysis considered the specific facts of the case, the interpretation of Rule 6(3) of CENVAT Credit Rules 2004, and the precedent set by a previous Tribunal decision regarding the reversal of credit for input services when separate accounts were not maintained. The judgment provided a clear direction to the appellant regarding the required actions for compliance and the implications for the ongoing appeal process.