2017 (7) TMI 1029 - AT - Central Excise

CENVAT credit - separate set of accounts for dutiable as well as exempt goods - case of Revenue is that when separate maintenance account for receipt, consumption and inventory of inputs which are common to dutiable as well as exempted goods has not been maintained in terms of Rule 6(2), the appellants will have to pay the amount equal to 8% or 10% of the sale price of the exempted final products cleared from the factory either for home consumption or for export. Held that - the demand is not sustainable as the proportionate credit is already reversed by the appellant and the same is allowed with retrospective effect - reliance placed in the case of M/s Bhusan Power & Steel Ltd. Versus Commissioner of Central Excise & Customs, BBSR II 2013 (11) TMI 843 - CESTAT KOLKATA - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against impugned orders passed by Commissioner - Identical issue in both appeals - Disposal by common order.

Analysis:

Issue 1: Reversal of credit on common inputs for dutiable and exempted goods

The appellant, engaged in manufacturing bulk drugs and medicines, filed appeals against orders demanding duty and penalty. The dispute revolved around the reversal of credit on common inputs used for both dutiable and exempted bulk drugs. The Commissioner confirmed the duty demand but dropped the penalty. The appellant argued that they had proportionately reversed the credit on common inputs, citing legal precedents and the retrospective amendment to Rule 6 of the Cenvat Credit Rules. The appellant relied on various decisions supporting their contention that the reversal of credit on common inputs was sufficient compliance with Rule 6. The Tribunal agreed with the appellant, citing settled law that the demand was unsustainable as the proportionate credit was already reversed by the appellant. The Tribunal set aside the impugned orders, allowing both appeals with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the reversal of credit on common inputs for dutiable and exempted goods was compliant with Rule 6, based on legal precedents and the retrospective amendment to the Cenvat Credit Rules.

Final Decision:
The Tribunal set aside the impugned orders, allowing both appeals of the appellant with consequential relief.