2020 (4) TMI 807 - HC - Central Excise

Validity of changes brought in Rule 6(3) (i) of Cenvat Credit Rules, 2004 - main contention of the counsel for the appellant is that the adjudicating authority as well as the Tribunal failed to appreciate the significant change brought in Rule 6(3) (i) of Cenvat Credit Rules, 2004 w.e.f. 1.3.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 - HELD THAT - The adjudicating authority and the Tribunal erred in not appreciating the significant change brought in Rule 6(3) of Cenvat Credit Rules, 2004, w.e.f. 1.3.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 which as noticed in the OIO with reference to sale of goods, was deleted and in its place the emphasis was shifted to the payment of an amount equal to 10% of the 'value' of exempted goods - In the absence of any findings to this effect that the provisions prescribed in the relevant Rule with reference to changes brought in Rule 6(3) of Cenvat Credit Rules, 2004 w.e.f. 1.3.2008 have been complied with or not, the dropping of the demand is against the spirit of law. Thus, dropping of the demand is correct only upto February,2008 in terms of Rule 6(3)(b) and demand raised for period March, 2008 onward is required to be examined in terms of changes brought in Rule 6(3)(b) of Cenvat Credit Rules, 2004 w.e.f. 01.03.2008 vide Notification No.10/2008 C.E.(N.T.) dated 1.3.2008 - the matter requires to be remanded to the Tribunal for reconsideration of the matter - appeal allowed by way of remand.

Summary

Issues:
Appeal under Section 35-G of the Central Excise Act, 1944 against the final order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. Determination of substantial question of law regarding changes in Rule 6(3)(i) of the Cenvat Credit Rules, 2004.

Analysis:
The judgment involves an appeal under Section 35-G of the Central Excise Act, 1944 against the final order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The substantial question of law to be determined is whether the tribunal was justified in ignoring the significant changes made in Rule 6(3)(i) of the Cenvat Credit Rules, 2004, vide notification no.10/2008 dated 1.3.2008. The respondent company, engaged in the manufacture of Cement Clinker and Cement, availed Cenvat Credit on inputs, capital goods, and services under Rule 3 of the Cenvat Credit Rules, 2004. The dispute arose from the use of explosives in the excavation of limestone, a part of which was used in dutiable products while the rest was transferred to a sister unit without payment of duty. The revenue claimed non-maintenance of separate records for inputs used in dutiable and exempted goods, leading to demands under Rule 6(3)(i) of the Cenvat Credit Rules, 2004.

The main contention was that the authorities failed to appreciate the changes in Rule 6(3)(i) post the notification no.10/2008 dated 1.3.2008. Rule 6 mandates the maintenance of separate accounts for inputs used in dutiable and exempted goods. The appellant argued that the tribunal did not consider the changes brought in Rule 6(3) post-March 2008, emphasizing the payment of an amount equal to 10% of the value of exempted goods for non-maintenance of separate accounts. The judgment highlighted the need for compliance with the amended provisions and the shift from 'sale' to 'removal' as per the changes in Rule 6(3)(i) of the Cenvat Credit Rules, 2004.

The court held that the dropping of the demand was correct up to February 2008 under Rule 6(3)(b) but required examination post-March 2008 in light of the changes in Rule 6(3)(b) as per the notification no.10/2008 dated 1.3.2008. The judgment emphasized the importance of considering the amended provisions and remanded the matter back to the Tribunal for a fresh decision, taking into account the significant changes made in Rule 6(3)(i) post the notification dated 1.3.2008. The appeals were allowed, and the matter was disposed of accordingly, requiring reconsideration by the Tribunal in accordance with the law.