2018 (5) TMI 283 - AT - Central Excise

CENVAT credit - common inputs were used for both dutiable as well as exempted goods - non-maintenance of separate records - Held that - there was retrospective amendment to the Rules by Finance Act, 2010 whereby proportionate credit availed on inputs attributable to exempted products had been allowed to be reversed - matter is remanded to the adjudicating authority for ascertaining the amount of credit availed on inputs attributable to the exempted products - appeal allowed by way of remand.

Summary

Issues: Appeal against Order-in-Original regarding proportionate CENVAT credit reversal for inputs used in manufacturing exempted products without separate records.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing excisable goods, used common inputs for both dutiable and exempted goods without separate records. A demand notice was issued to pay 10% of the value of exempted products for a specific period, confirmed on adjudication.

2. Appellant's Submission: The appellant claimed to have periodically reversed the proportionate CENVAT credit on inputs used for exempted products, citing the decision of the Hon'ble Gujarat High Court in a similar case.

3. Revenue's Submission: The Revenue argued for verification of the credit reversal, suggesting a remand based on the Gujarat High Court's observation in a specific paragraph of their order.

4. Retrospective Amendment: The Tribunal noted a retrospective amendment to the Rules by the Finance Act, 2010, allowing the reversal of proportionate credit on inputs for exempted products. The Gujarat High Court's judgment acknowledged this amendment and directed the matter to be remanded for determining the credit availed on inputs for exempted products.

5. Decision: Considering the judgment, the Tribunal remanded the matter to the adjudicating authority to ascertain the credit availed on inputs for exempted products and issue an appropriate order accordingly. The appeal was allowed by way of remand, following the legal provisions and the High Court's directive.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal provisions invoked, and the specific directions given by the Tribunal based on the relevant case law and amendments to the rules.