2019 (5) TMI 51 - AT - Central Excise

CENVAT Credit - steam, an exempt product - denial on the ground that the appellant is clearing steam to an outside factory - Rule 6 of CCR - HELD THAT - Whether the steam in question was cleared only to 100% EOUs as has been recorded in the second show-cause notice but not in the first show-cause notice and as has been asserted by the learned Chartered Accountant. If the entire steam was cleared to 100% EOUs, then in terms of Rule 6 (6)(ii) no reversal of CENVAT credit is required. This factual position has to be verified by the adjudicating authority. CENVAT Credit - input services availed from M/s Institute of Chemical Technology, (ICT) Mumbai by the appellant in their attempt to produce soya protein in their factory - HELD THAT - It needs to be verified whether the entire production during the relevant period was cleared on payment of excise duty. Learned A.R. points out that the invoices presented by the learned Chartered Accountant is of 2017 while the services were availed during 2014-15. Therefore, the correlation is required and this verification has to be done. Appeal allowed by way of remand.

Summary

Issues:
- Dispute over CENVAT credit reversal for steam cleared to outside factory
- Eligibility of CENVAT credit on input services from M/s ICT Mumbai for soya protein production

Analysis:

1. CENVAT Credit Reversal for Steam Cleared:
The appellant, engaged in chemical manufacturing, faced a dispute regarding the reversal of CENVAT credit for steam cleared to an outside factory exempted from excise duty. The Revenue contended that CENVAT credit needed to be reversed at a rate of 6% of the value of the steam cleared. However, the First Appellate Authority reduced the demand and remanded the matter for quantification. The key issue was whether the appellant had to reverse CENVAT credit under Rule 6 of the CENVAT Credit Rules 2004. The appellant argued that since the steam was cleared to a 100% Export Oriented Unit (EOU), the demand under Rule 6(6) did not apply. The Tribunal found a factual dispute regarding the clearance of steam and remanded the matter for verification by the adjudicating authority.

2. Eligibility of CENVAT Credit on Input Services for Soya Protein Production:
Another issue revolved around the eligibility of CENVAT credit on input services availed from M/s ICT Mumbai for trial production of soya protein. The First Appellate Authority held that services used in setting up a plant were not eligible for credit post an amendment in 2011. The appellant contested this finding, providing evidence of manufacturing and clearing soya protein products on payment of excise duty. The Tribunal emphasized the need to verify whether the entire production was cleared with excise duty payment. As the invoices provided were of a later date than the services availed, correlation verification was deemed necessary. Consequently, the matter was remanded to the original authority for further examination.

In conclusion, the Tribunal allowed the appeal of the assessee by remanding the issues for verification and decision by the original authority. The appeal of the Revenue was dismissed as the entire matter was remanded. The disputes concerning CENVAT credit reversal for steam cleared and eligibility of credit on input services for soya protein production required factual verification and hence warranted remand for further assessment.