2012 (2) TMI 104 - AT - Central Excise

Cenvat - Common Modvatable inputs used in the manufacture of exempted as well as dutiable products manufacture of biscuit - demand confirmed @ 10% of the value of the exempted products appellant contested for reversal of Modvat credit relatable to inputs used in the manufacture of exempted final products Held that - In view of decision in case of CCE vs Maize Products(2008 - TMI - 48307 - High Court Of Gujarat At Ahmedabad), assessee can be directed even at the appeal stage to quantify the quantum of Modvat credit required to be reversed by them. Accordingly we set aside the order and remand the matter to the original adjudicating authority to quantify the credit along with the interest required to be reversed by them Decided in favor of assessee.

Summary

Issues:
1. Interpretation of Notification No.3/07-CE and Notification No.22/07 regarding exemption for biscuits with specific RSP.
2. Application of Rule 6 of Cenvat Credit Rules in the case of using common Modvatable inputs for exempted and dutiable products.
3. Dispute over the method of calculating demand for reversal of Modvat credit.
4. Consideration of case law precedents from the Hon'ble Gujarat High Court for directing the reversal of Modvat credit.

Analysis:
1. The judgment involves a dispute concerning the clearance of biscuits by claiming the benefit of Notification No.3/07-CE and Notification No.22/07, which exempt biscuits with specific RSP limits. The appellants, engaged in biscuit manufacturing, faced a demand confirmation under Rule 6 of Cenvat Credit Rules for using common inputs in both exempted and dutiable biscuits.

2. The appellants argued that instead of demanding 10% of the value of the exempted products under Rule 6, they should be directed to reverse the Modvat credit related to inputs used in manufacturing exempted final products. The lower authorities had not considered this argument, leading to an appeal based solely on the point of limitation, as noted by the Commissioner(Appeals).

3. Citing decisions from the Hon'ble Gujarat High Court in relevant cases, the appellants requested the Tribunal to set aside the impugned order and remand the matter to the original adjudicating authority for determining the quantum of Modvat credit to be reversed. The Tribunal, after considering the arguments, directed the original authority to quantify the credit to be reversed, along with interest, in consultation with the appellants, providing them an opportunity to present their case.

4. By following the legal precedents from the Hon'ble Gujarat High Court, the Tribunal allowed for the redetermination of Modvat credit to be reversed, even at the appeal stage, emphasizing the need for proper quantification and consultation with the concerned parties. The judgment concluded by setting aside the impugned order and remanding the matter for further proceedings in accordance with the directions provided.