2016 (12) TMI 384 - AT - Central Excise

Demand - the appellant is located in the state of Himachal Pradesh and availed exemption under Notification 50/2003-CE dated 17.07.2006 - reversal of credit availed - Held that - As facts of this case has not been disputed and the Ld. AR disputed only the quantum of input service credit reverse. In that circumstance, it would be in the interest of justice and the matter is remanded back to the adjudicating authority to verify the fact that whether the appellant has reversed on proportionate cenvat credit attributable to input service used in manufacturing of final exempted product or not? If the appellant has reversed cenvat credit attributable to input service used in exempted final product, no proceedings shall be warranted against the appellant. If any, discrepancy is found, in that circumstance, the appellant shall reverse the cenvat credit along with interest - appeal disposed off by way of remand.

Summary

Issues:
- Availing cenvat credit on inputs service for exempted and dutiable goods
- Reversal of cenvat credit by the appellant
- Show cause notice for demanding 10% of the value of exempted goods
- Adjudication confirming the demand, interest, and penalty
- Contention regarding the reversal of cenvat credit by the appellant
- Dispute over the quantum of input service credit reverse
- Remanding the matter back to verify the reversal of cenvat credit

Analysis:

The appellant, located in Himachal Pradesh, availed exemption under Notification 50/2003-CE but was informed during an audit that they were not entitled to cenvat credit on input services used for manufacturing exempted and dutiable goods. Subsequently, the appellant reversed the cenvat credit for input services used in the manufacture of exempted final products. A show cause notice was issued demanding 10% of the value of exempted goods, which was adjudicated confirming the demand and imposing interest and penalty. The appellant contended that they had correctly reversed the cenvat credit, while the Ld. AR disputed the quantum of credit reversed, leading to the matter being remanded back for verification.

The dispute centered on whether the appellant had indeed reversed the cenvat credit attributable to input services used in manufacturing exempted final products. As the facts were undisputed and the Ld. AR only contested the quantum of credit reversed, the Tribunal deemed it necessary for the adjudicating authority to verify if the appellant had reversed the proportionate cenvat credit correctly. If the reversal was found to be accurate, no further proceedings were warranted. However, if any discrepancies were identified, the appellant was directed to reverse the cenvat credit along with interest. The appeal was disposed of with these terms, emphasizing the importance of ensuring the correct reversal of cenvat credit in such cases.