2015 (10) TMI 1828 - AT - Central Excise

Duty demand - procedure as prescribed under Rule 6 of the Cenvat Credit Rules, 2002 not followed - Held that - issue involved is covered by the amendment by Finance Act, 2010. In view of that, we set-aside the impugned order and appeal is allowed with consequential relief. - Decided in favour of assessee.

Summary

Issues involved:
1. Admissibility of Cenvat credit on inputs used in the manufacture of exempted products
2. Compliance with Rule 6 of the Cenvat Credit Rules, 2002
3. Impact of the retrospective amendment by Finance Act, 2010

Admissibility of Cenvat credit on inputs used in the manufacture of exempted products:
The appellants were engaged in manufacturing P&P Medicines and used common inputs for both dutiable and exempted products. The adjudicating authority confirmed a demand of 8% of the sale value of exempted goods due to non-compliance with Rule 6 of the Cenvat Credit Rules, 2002. The appellant reversed a proportionate credit of Rs. 4,41,671 used in the manufacture of exempted products for the disputed period from November 2003 to April 2004.

Compliance with Rule 6 of the Cenvat Credit Rules, 2002:
The amendment introduced by the Finance Act, 2010, inserted a new sub-rule (6) in Rule 6 of the Cenvat Credit Rules, 2002, with retrospective effect. This sub-rule allowed manufacturers availing Cenvat credit on inputs used in the manufacture of exempted goods to pay an amount equivalent to the Cenvat credit attributable to those inputs, along with interest, for the period between March 1, 2002, and September 9, 2004. The due date for payment was defined as the 5th day of the month following the month in which goods were cleared from the factory.

Impact of the retrospective amendment by Finance Act, 2010:
The issue in question was found to be covered by the retrospective amendment introduced by the Finance Act, 2010. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. Additionally, the application for an extension of the period of the stay order was disposed of by the tribunal.

This detailed analysis of the judgment highlights the issues of admissibility of Cenvat credit, compliance with Rule 6 of the Cenvat Credit Rules, 2002, and the impact of the retrospective amendment by the Finance Act, 2010 on the case.