2022 (3) TMI 358 - AT - Central Excise

Reversal of proportionate credit - common inputs and input services consumed in by-product while manufacturing the final goods - credit on the invoices issued prior to 01/09/2014 within six months after the issuance of the Notification No. 21/2014 CE (NT) dated 11/07/2014. CENVAT Credit on common inputs and input services consumed in by-product - HELD THAT - The said issue has been settled by the Tribunal in the case of M/S ANIL PRODUCTS LTD. VERSUS CCE AHMEDABAD 2011 (4) TMI 796 - CESTAT, AHMEDABAD and the said order has been affirmed by the Hon ble Gujarat High Court in COMMISSIONER CENTRAL EXCISE AND CUSTOMS VERSUS ANIL PRODUCTS LTD. 2013 (10) TMI 798 - GUJARAT HIGH COURT where it was held that As per RALLIS INDIA LTD. Versus UNION OF INDIA 2008 (12) TMI 46 - HIGH COURT BOMBAY it is held that where common inputs are used in the manufacture of dutiable and exempted product, liability to pay amount under erstwhile Rule 57CC of Central Excise Rules, 1944 arises only for product and not for waste/byproduct. As find from the impugned order that the exempted products are admittedly in the nature of byproduct/ waste/residue arising during the course of manufacture of dutiable final product, the ratio of above decision of Mumbai High Court would squarely apply to the same. Thus, the provisions of Rule 6 are not applicable to the appellants in these cases. Therefore, the appellants are not required to reverse the proportionate cenvat credit used in by-product while manufacturing their final product. Accordingly, the demand on the said count is set aside. Whether the appellant can avail cenvat credit on the invoices issued prior to 01/09/2014 within six months after the issuance of the Notification No. 21/2014 CE (NT) dated 11/07/2014 or not? - HELD THAT - The issue has already been settled and no more res integra in the case of BHARAT ALUMINIUM COMPANY LIMITED VERSUS JOINT COMMISSIONER OF CENTRAL TAX, GOODS SERVICE TAX 2019 (7) TMI 1084 - CESTAT NEW DELHI where it was held that the six month limitation provided with effect from 01/09/2014 would not apply to the cenvatable invoices issued prior to said date - thus the appellants have correctly taken the cenvat credit on 18/09/2014 for the invoices issued prior to 01/09/2014. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is required to reverse the proportionate cenvat credit on inputs and input services consumed in by-products while manufacturing the final goods.
2. Whether the appellant can avail cenvat credit on the invoices issued prior to 01/09/2014 within six months after the issuance of Notification No. 21/2014 CE (NT) dated 11/07/2014.

Analysis:

Issue 1:
The appellant, a manufacturer of various products, availed cenvat credit on inputs and input services used in their final product. The Revenue alleged that the appellant did not pay duty on some by-products emerging during manufacturing and took cenvat credit for invoices issued before 01/09/2014 after the specified time limit. Additionally, it was claimed that the appellant should reverse cenvat credit on inputs and services in proportion to the value of by-product residue. The Adjudicating authority confirmed the demand, leading to the appeal. The appellant argued that a previous Tribunal case and a High Court decision supported their entitlement to cenvat credit for pre-2014 invoices and that Rule 6 provisions did not apply to their case. The Tribunal concurred, citing precedents, and set aside the demand for reversing cenvat credit on the by-product residue.

Issue 2:
The second issue revolved around whether the appellant could avail cenvat credit for invoices issued before 01/09/2014 within the specified time limit. The appellant relied on various tribunal decisions and a High Court ruling to support their position. The Tribunal, after considering the settled nature of the issue and verifying the invoice dates, held in favor of the appellant, allowing them to retain the cenvat credit taken on 18/09/2014 for pre-2014 invoices. The impugned orders were set aside, and the appeals were allowed with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, allowing them to retain the cenvat credit and setting aside the demands for reversing the credit related to by-product residue. The judgment emphasized the settled nature of the issues based on previous decisions and provided relief to the appellant.