2018 (1) TMI 1595 - AT - Central Excise

CENVAT Credit - common input services used in the manufacture of taxable as well as exempt goods - non-maintenance of separate records - Rule 6(3) of the Cenvat Credit Rules - HELD THAT - The adjudicating authority has clearly recorded that the total Cenvat Credit in respect of common input services taken by them was not reversed and only an amount of ₹ 80,006/- was reversed by them. During the course of arguments, the learned counsel submits that the entire amount was reversed, but the adjudicating authority has not taken any cognizance. The matter is remanded to the original authority to decide the issue afresh, but by providing a reasonable opportunity to the assessee-Appellants to present their case with liberty to file additional documents, if any, as per law - appeal allowed by way of remand.

Summary

Issues:
- Appeal against Order-in-Original No. 5/2013(CE) dated 14.02.2013 passed by the Commissioner of Central Excise, Jaipur-I for the period 2007-08 to November, 2011.
- Cenvat Credit of common input services not reversed leading to imposition of duty on exempted goods.
- Dispute regarding the reversal of Cenvat Credit and amount reversed by the assessee-Appellants.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Principal Bench, New Delhi was filed by the assessee-Appellants challenging the Order-in-Original passed by the Commissioner of Central Excise, Jaipur-I. The case revolved around the period from 2007-08 to November 2011, during which the assessee-Appellants were involved in the manufacture of safety shoes, hand gloves, and work wears. While hand gloves and work wears were exempted, safety shoes were subject to Central Excise Duty. The issue arose as the assessee-Appellants had taken Cenvat Credit of common input services but failed to reverse the required percentage of the credit in accordance with Rule 6(3) of the Cenvat Credit Rules.

During the proceedings, it was noted that the total Cenvat Credit in respect of common input services taken by the assessee-Appellants was not fully reversed, with only an amount of ?80,006 being reversed. The counsel for the assessee-Appellants contended that the entire amount had indeed been reversed, contrary to the findings of the adjudicating authority. In light of this discrepancy, the Tribunal set aside the impugned order and remanded the matter back to the original authority for a fresh decision. The Tribunal directed the original authority to provide a reasonable opportunity to the assessee-Appellants to present their case and submit additional documents if necessary, as per the law.

Ultimately, the appeal filed by the assessee-Appellants was allowed by way of remand, signifying a partial success for the appellants in challenging the imposition of duty on exempted goods due to the non-reversal of Cenvat Credit. The judgment emphasized the importance of proper documentation and compliance with Cenvat Credit Rules to avoid such disputes and highlighted the right of the appellants to present their case effectively before the authorities.