2016 (11) TMI 1282 - AT - Central Excise

Refund claim - reversal of cenvat credit wrongly - whether the appellant is required to reverse the CENVAT credit availed on inputs and input services attributable to LPG cleared by availing exemption under Notification No. 4/2006-CE dated 01.03.2006 during the period May, 2007 to April, 2008 or other wise? - Held that - the contention of the appellant cannot be acceptable as there is a specific mention of reversal of CENVAT credit attributable to inputs and input services under Rule 6 (3)(a)(viii) of CCR, 2004 where the Appellants fail to maintain separate records. Reading the definition of the exempted goods prescribed at Rule 2(d) of the said CCR Rules,2004 and the said provisions it cannot be said that LPG exempted or chargeable to NIL rate of duty are not required to reverse proportionate CENVAT credit on the inputs attributable to the exempted product. In the present case, the appellant are well aware of the quantum of CENVAT credit on inputs and input services used in our in relation of LPG used for domestic purpose and accordingly reversed the same periodically as per the said Rules - refund not allowed - appeal rejected - decided against appellant-assessee.

Summary

Issues:
- Appeal against rejection of refund claim for CENVAT credit reversal on LPG cleared under exemption
- Interpretation of Rule 6 of CENVAT Credit Rules, 2004 regarding reversal of credit
- Applicability of Notification No. 4/2006-CE dated 01.03.2006 on conditional exemptions

Analysis:
1. The appellant filed an appeal against the rejection of their refund claim for wrongly reversed CENVAT credit amount on LPG cleared under exemption. The Commissioner (Appeals) upheld the rejection, leading to the present appeal.

2. The appellant argued that they were unaware of the end-use of LPG when availing CENVAT credit, citing a conditional exemption under Notification No. 4/2006-CE. They relied on a judgment by the Rajasthan High Court, supported by a Supreme Court decision, to claim exemption from credit reversal.

3. The Revenue contended that the exemption principle cited by the appellant does not apply to this case. They emphasized that the appellant knew the purpose of LPG clearance and reversed the credit accordingly. Referring to Rule 6 of CENVAT Credit Rules, they highlighted the mandatory reversal provision for exempted goods.

4. The Tribunal examined whether the appellant must reverse CENVAT credit on inputs for LPG cleared under the exemption. It rejected the appellant's argument, emphasizing Rule 6(3)(a)(viii) of CCR, 2004 requiring credit reversal for non-maintenance of separate records. The Tribunal found the appellant's awareness of credit reversal obligations and dismissed the relevance of cited case laws.

5. The Tribunal concluded that the appellant, being aware of credit reversal requirements, failed to show grounds for interference with the Commissioner (Appeals) order. It upheld the rejection of the refund claim, deeming the appeal meritless. Consequently, the appeal was rejected, affirming the Commissioner's decision.

This detailed analysis outlines the core issues of the appeal, the arguments presented by both parties, and the Tribunal's reasoning leading to the dismissal of the appeal against the rejection of the refund claim for CENVAT credit reversal on LPG cleared under exemption.