2019 (1) TMI 1578 - AT - Central Excise

CENVAT credit - common inputs which are used for exempted as well as dutiable goods - non-maintenance of separate set of records - Rule 6 of CCR - applicability of retrospective amendment to Rule 6 of CCR 2004, under section 73 of Finance Act, 2010 where it was stated that reversal of the credit attributable to the inputs used in the exempted goods is sufficient - HELD THAT - The said retrospective amendment would apply in the case in hand as there is no dispute that the appellant had reversed proportionate amount of CENVAT Credit on the inputs which were utilised for the exempted goods manufactured and cleared - To that extent the impugned order is upheld and the orders which confirmed the demand equivalent to 8% of the valuation of the exempted goods is set aside. Interest ad penalty - HELD THAT - In the absence of discharge of interest on the specified date, the appellant is not entitled for any relief on the penalty. The appellant is required to pay the interest as applicable on the amount reversed by him on 28.04.2008 and also the penalty imposed. Appeal allowed in part.

Summary

Issues involved:
Demand of 10% amount on exempted goods, CENVAT Credit reversal, retrospective amendment to Rule 6 of CCR 2004, penalty imposition, interest payment.

Analysis:

1. Demand of 10% amount on exempted goods:
The appeal addressed the issue of demanding an amount equivalent to 10% of the value of exempted goods cleared during a specific period. The appellant had availed CENVAT Credit for common inputs used in both exempted and dutiable goods without maintaining separate accounts. The authorities alleged liability due to the lack of separate accounts and issued a show cause notice. The appellant reversed the CENVAT Credit before the adjudication order, but both lower authorities concluded that the reversal was insufficient. However, a retrospective amendment to Rule 6 of CCR 2004 clarified that reversal of credit attributable to inputs used in exempted goods is sufficient. The tribunal upheld the appellant's position based on this amendment.

2. CENVAT Credit reversal:
The appellant had reversed a proportionate amount of CENVAT Credit on inputs utilized for exempted goods. The tribunal found this reversal in compliance with the retrospective amendment, leading to the setting aside of the demand equivalent to 8% of the exempted goods' valuation. However, the appellant's failure to pay interest on the reversed amount on the specified date led to the tribunal denying relief on the penalty imposed.

3. Retrospective amendment to Rule 6 of CCR 2004:
The tribunal applied the retrospective amendment to the case, emphasizing that the appellant's reversal of CENVAT Credit on inputs used for exempted goods aligned with the amendment's requirements. This application of the amendment played a crucial role in the tribunal's decision to set aside the demand and penalty, except for the interest payment.

4. Penalty imposition and interest payment:
While the tribunal accepted the appellant's compliance with the retrospective amendment regarding CENVAT Credit reversal, the failure to pay interest on the reversed amount resulted in the tribunal upholding the penalty imposition. The appellant was deemed not entitled to relief on the penalty due to the non-payment of interest as required.

In conclusion, the tribunal's decision in the appeal addressed the issues of CENVAT Credit reversal, retrospective amendment application, penalty imposition, and interest payment. The appellant's compliance with the retrospective amendment regarding CENVAT Credit reversal led to the setting aside of the demand, except for the penalty due to non-payment of interest.