2015 (5) TMI 1181 - AT - Central Excise

CENVAT Credit - Clearance of metallurgical coke to their sister unit without payment of duty - proportionate credit on inputs used in manufacture of metallurgical coke reversed by appellant - Rule 6(3) of Cenvat Credit Rules 2004 - Held that - It is evident that appellants have reversed the credit of 38, 077/- attributable to the quantum of inputs used in the manufacture of metallurgical coke and also proportionate amount of input service of 4, 09, 487/- reversed vide S. No. 3403 and S. No. 5156 both dated 5.12.2011 in their cenvat account - Consequent to that amendment of cenvat credit rules with retrospective effect vide Finance Act 2010 if the appellants reversed the proportionate credit question of demanding equivalent to 10% of the value does not arise. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand under Rule 6(3) of Cenvat Credit Rules, 2004 on the clearance of metallurgical coke to sister unit.

Analysis:
The judgment pertains to a case involving the demand under Rule 6(3) of the Cenvat Credit Rules, 2004 on the clearance of metallurgical coke to a sister unit during a specific period. The issue was considered to be of a narrow scope, prompting the tribunal to proceed with the main appeal after dispensing with the stay application, with the agreement of both parties. It was argued that metallurgical coke, produced using Anthracite coal in coke ovens for steel manufacturing, was cleared to a sister unit without duty payment. The demand of approximately &8377; 7.92 crores, equivalent to a percentage of the value of exempted goods under Rule 6(3)(1) of CCR, was confirmed by the Commissioner Central Excise, Salem.

Upon review, it was noted that the appellants had already reversed a specific amount of credit in their cenvat account, in compliance with the retrospective amendment of cenvat credit rules introduced by the Finance Act, 2010. This reversal of credit, as per the Tribunal's precedent in the case of Burn Standard Co. Ltd. v. CCE Salem, which was upheld by the Hon'ble Madras High Court, negated the necessity of demanding an amount equivalent to a percentage of the value. The adjudicating authority had also taken into account this credit reversal and the appellants had paid the interest as well. Consequently, the tribunal allowed the appeal, setting aside the impugned order, and disposed of the stay application accordingly.

In conclusion, the judgment focused on the application of Rule 6(3) of the Cenvat Credit Rules, 2004 in the context of the clearance of metallurgical coke to a sister unit. The decision highlighted the importance of compliance with credit reversal requirements in light of retrospective amendments, ultimately leading to the allowance of the appeal and the overturning of the demand imposed by the adjudicating authority.