2017 (7) TMI 592 - AT - Central Excise

CENVAT credit - retrospective benefit under Section 69 of the Finance Act, 2010 - denial on the ground that the interest @ 24% on the amount credit calculated, as required to be reversed was not discharged by the assessee - Held that - the assessee has filed an application declaring one input namely, printing ink as commonly used both dutiable and exempted final product involving CENVAT credit of ₹ 12,474/- and interest ₹ 10,006/-. But later they have furnished their information for other inputs also during the course of adjudication proceeding. Thus, it cannot be said that the adjudicating authority have traveled beyond the scope of the proceeding - the ld. Commissioner has arrived at the total amount of proportionate credit required to be reversed by the assessee, used both on dutiable and exempted product. The computation of quantum credit has been disputed by the assessee on the ground that while computing the amount, the inputs which were exclusively used in the exempted product cannot be construed as common inputs used both dutiable as well as exempted product. Hence, the amount if properly calculated would be reduced to around ₹ 4.00 lakhs - Revenue s appeal that the assessee should not be eligible to benefit of reversal of credit retrospectively, is without merit and not acceptable. The interest to be calculated within 10 days from the date of communication of the order, therefore, there is no discrepancy in the impugned order on this count. However, for re-determination of the quantum of proportionate credit, required to be reversed, the matter is remanded to the adjudicating Commissioner with the direction to decide the issue afresh - appeal allowed by way of remand.

Summary

Issues:
- Appeal against Order-in-Original dated 3.12.2010
- Discrepancy in calculation of CENVAT credit
- Applicability of Finance Act, 2010
- Communication of order within two months
- Re-computation of credit and interest

Analysis:
1. Appeal against Order-in-Original dated 3.12.2010:
The appeals were filed against Order-in-Original No. Section 68 to 72/F.A./ Commissioner/01/2010 dated 3.12.2010 passed by the Commissioner, Central Excise, Ahmedabad II, with one appeal by the Revenue and another by the Assessee.

2. Discrepancy in calculation of CENVAT credit:
The appellant-assessee contested that the CENVAT credit availed as calculated by the adjudicating authority was erroneous. They argued that the amount of credit was overstated, and the order was legally flawed as the short payment of credit was not notified within two months from the application.

3. Applicability of Finance Act, 2010:
The Revenue appealed on the grounds that the Finance Act, 2010 scheme could not be applied to the appellant-assessee as they allegedly failed to pay the interest amount on the reversed credit within the stipulated period under the said Scheme.

4. Communication of order within two months:
The appellant-assessee contended that the order directing reversal of the credit amount could not be upheld as it was not communicated within two months from the date of application, as required by law.

5. Re-computation of credit and interest:
The issue of re-computation of the credit and interest arose due to discrepancies in the calculation methodology. The appellant argued that the total credit amount to be reversed was inaccurately determined, and the interest payment could not be enforced based on the incorrect calculation. The Tribunal found merit in the appellant's contention and remanded the matter to the adjudicating Commissioner for a fresh decision after re-calculating the proportionate credit to be reversed. The Tribunal dismissed the Revenue's appeal, stating that the appellant was eligible for the benefit of credit reversal retrospectively.

In conclusion, the Tribunal found that the adjudicating authority had incorrectly calculated the CENVAT credit to be reversed by the appellant. The Tribunal directed a re-computation of the credit amount, considering only the inputs used in both dutiable and exempted products. The order was remanded for a fresh decision after hearing the appellant. The Tribunal dismissed the Revenue's appeal, affirming the appellant's entitlement to the benefit of credit reversal under the Finance Act, 2010.