2019 (8) TMI 1773 - HC - Central Excise

CENVAT Credit - taxable as well as exempt goods - receipt of input service but reversed subsequently alongwith interest - verification of quantification of reversal without passing final order on the demand and penalty - HELD THAT - The Tax Appeal is admitted on the substantial questions of law.

Summary

Issues:
1. Correctness of CESTAT's decision on reversal of credit for exempted goods and interest payment.
2. Correctness of CESTAT's decision on reversal of Cenvat Credit for input services.
3. Sufficiency of subsequent reversal of Cenvat Credit for exempted goods.
4. Correctness of remand for quantification verification without final order on demand and penalty.
5. Justification for not relying on specific cases by CESTAT.

Issue A:
The High Court considered whether the CESTAT's decision on the reversal of credit for service related to exempted goods, along with interest payment, precludes the demand for the prescribed rate under Rule 6(3). It was analyzed whether the payment of interest by the Appellant upon delayed reversal of credit affects the demand calculation.

Issue B:
The Court examined the correctness of the CESTAT's ruling regarding the reversal of Cenvat Credit for input services. The question revolved around whether the subsequent reversal of credit, even after initial availing, nullifies the initial credit availed at the time of input service receipt.

Issue C:
Regarding the sufficiency of subsequent reversal of Cenvat Credit for exempted goods, the Court assessed whether such reversal, along with interest payment for delay, is adequate to meet the demand of the prescribed rate for exempted goods. This analysis considered the Appellant's failure to maintain separate accounts or follow Rule 6(3) options.

Issue D:
The correctness of the CESTAT's decision to remand the matter for quantification verification without issuing a final order on demand and penalty was scrutinized. The Court evaluated the necessity and legality of remanding the case solely for the purpose of verifying the quantification of reversal without concluding on the demand and penalty imposed.

Issue E:
The Court reviewed the CESTAT's decision not to rely on specific cases, including Commissioner of Central Excise, ThaneI Vs Nicholas Piramal (India) Ltd., Gujarat Narmada Fertilizers Co. Ltd., and others. This analysis assessed whether the CESTAT's justification for not considering these cases, despite similarities to the present case, was valid and in line with legal principles.