2016 (8) TMI 929 - AT - Central Excise

Reversal of amount equal to 10% or 5% on the value of exempted goods - Rule 6 of the Cenvat Credit Rules, 2004 - clearance of bagasse, press mud and boiler ash and compost etc. - Held that - the issue is squarely covered by the decision of Tribunal in the case of Balrampur Chini Mills Ltd. 2004 (11) TMI 567 - CESTAT NEW DELHI (which has been affirmed by the Hon ble Apex Court). In view of the same, the demand is set aside. Reversal of credit - HR sheets used for fabrication of biogas digester tank, which is exempted capital goods under Notification No.06/2006 dated 01/03/2006 - Held that - it is seen that biogas tank is a part of biogas plant and Biogas plant is covered under Notification No.6/2006, therefore, parts of biogas plant are also covered. In view of the above, it is apparent that biogas storage tank is examined under Notification No.6/2006 and is exempted under Notification No.67/95. Therefore by relying on the decision of Tribunal in the case of KCP Ltd., the appeal is allowed. - Decided in favour of appellant

Summary

Issues involved:
1. Reversal of amount under Rule 6 of the Cenvat Credit Rules for exempted goods.
2. Reversal of credit on inputs used for fabrication of exempted capital goods.

Analysis:

Issue 1: Reversal of amount under Rule 6 of the Cenvat Credit Rules for exempted goods:
The appellant challenged the demand for reversal of an amount equal to a percentage of the value of exempted goods like bagasse, press mud, and compost under Rule 6 of the Cenvat Credit Rules, 2004. The appellant argued that a previous decision by the Tribunal in the case of Balrampur Chini Mills Ltd. had been affirmed by the Honorable Apex Court, setting a precedent in favor of the appellant's position. The Tribunal found that the issue was indeed covered by the aforementioned decision and set aside the demand for reversal of the amount under Rule 6 of the Cenvat Credit Rules.

Issue 2: Reversal of credit on inputs used for fabrication of exempted capital goods:
Regarding the demand for reversal of credit on inputs used for the fabrication of a biogas digester tank, which is an exempted capital good, the appellant relied on the decision of the Tribunal in the case of KCP Ltd. The Tribunal noted that the biogas storage tank is a part of the biogas plant covered under specific notifications. The appellant argued that the inputs, in this case, HR sheets used for manufacturing the biogas storage tank, should be admissible based on the definition of "input" under the Cenvat Credit Rules. The Tribunal referenced the decision in the case of KCP Ltd. to support the appellant's claim that inputs used in the manufacture of capital goods, even if exempted, are entitled to credit. Therefore, the Tribunal allowed the appeal, finding the situation similar to the precedent set in the KCP Ltd. case.

In conclusion, the Tribunal allowed the appeal in favor of the appellant, setting aside the demand for reversal of the amount under Rule 6 of the Cenvat Credit Rules and granting credit for inputs used in the fabrication of exempted capital goods based on established legal principles and precedents.