2024 (6) TMI 175 - AT - Central Excise

CENVAT Credit - exempted Biscuits having retail price less than Rs.100/- - requirement to pay 10% of the value of the exempted Biscuits - appellant already reversed proportionate cenvat credit with interest before issuance of Show Cause Notice, availed on common inputs/input services but used in the manufacture of exempted Biscuits - HELD THAT - Since the appellant has reversed the credit with interest availed on inputs and input services attributable to exempted products, accordingly in view of the series of judgments referred to by the learned advocate for the appellant and also in view of the retrospective amendment to the relevant Cenvat Credit Rules, 2004 vide Section 72 and 73 of Finance Act, 2010 and Notification No. 13/2016-CE(NT) dated 01.03.2016, the demand of 10% of the value of the exempted goods confirmed by the learned Commissioner in the impugned order cannot be sustained. Reliance can be placed in M/S. SHEELA FOAM PVT. LTD. VERSUS COMMR. OF CENTRAL EXCISE, KOLKATA-IV AND MR SATISH AGARWAL M/S. SHEELA FOAM PVT. LTD. EXECUTIVE ACCOUNTANT VERSUS COMMR. OF CENTRAL EXCISE, KOLKATA-IV 2024 (2) TMI 957 - CESTAT KOLKATA where on similar issue demand was set aside. The impugned order is set aside - appeal is allowed.

Summary

Issues involved: Appeal against Order-in-Original regarding availing of cenvat credit on inputs for both exempted and dutiable goods without maintaining separate accounts u/r 6(3)(b) of CENVAT Credit Rules, 2004.

The appellant, engaged in manufacturing excisable goods, availed cenvat credit on inputs for both exempted and dutiable goods without maintaining separate accounts as required u/r 6(3)(b) of CENVAT Credit Rules, 2004. The dispute arose when the retail price of exempted biscuits increased, leading to demands for payment of duty. The appellant reversed the credit with interest before the issuance of the Show Cause Notice, arguing that the demand cannot be sustained. The Tribunal considered relevant case laws and amendments to the Cenvat Credit Rules, 2004, and concluded that the demand of 10% of the value of exempted goods cannot be upheld due to the reversal of credit with interest. The impugned order was set aside, and the appeal was allowed in favor of the appellant.

Key points:
1. Appellant availed cenvat credit on inputs for both exempted and dutiable goods without maintaining separate accounts.
2. Dispute arose when the retail price of exempted biscuits increased, leading to demands for payment of duty.
3. Appellant reversed the credit with interest before the issuance of the Show Cause Notice.
4. Tribunal considered relevant case laws and amendments to the Cenvat Credit Rules, 2004.
5. Concluded that the demand of 10% of the value of exempted goods cannot be upheld due to the reversal of credit with interest.
6. Impugned order set aside, and the appeal allowed in favor of the appellant.