2012 (2) TMI 176 - AT - Central Excise

Quantification of reversal of credit electricity - credit reversed @ 10% of the value of the electricity - no separate records are maintained in respect of Cenvat Credit on the common inputs used in the manufacture of dutiable as well as exempted goods - Held that - In as much as the issue relates to the correct quantification of reversal of credit which can only be decided at the original adjudicating authority level, we set aside the impugned order and remand the matter to Commissioner(Appeals) for quantifying the credit amount required to be reversed. See Maize Products vs CCE (2008 - TMI - 48307 - High Court Of Gujarat At Ahmedabad)

Summary

Issues:
Quantification of reversal of Cenvat Credit for exempted electricity used in final product.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi, involved the issue of quantification of reversal of Cenvat Credit for exempted electricity used in the final product. The appellants argued that they had reversed the Modvat Credit used for the exempted final product, but the dispute primarily revolved around the quantum of this reversal. The Commissioner(Appeals) had passed an order against the appellants for not maintaining separate records for Cenvat Credit on common inputs used in both dutiable and exempted products. Both sides agreed that the reversal of credit was sufficient as per the law declared by the Hon'ble High Court and Section 73 of the Finance Act, 2010. The Tribunal found no dispute on the legal issue regarding the reversal but remanded the matter back to the Commissioner(Appeals) for quantifying the credit amount required to be reversed. The appellants were to be given an opportunity to present their case at the original adjudicating authority level. The stay petition and the appeal were disposed of in this manner, emphasizing the importance of correct quantification of the credit amount to be reversed.

This judgment highlighted the significance of maintaining separate records for Cenvat Credit on common inputs used in the manufacture of both dutiable and exempted products. The appellants' argument that they had reversed the Modvat Credit used for the exempted final product was considered, but the focus remained on the correct quantification of the credit amount to be reversed. The Tribunal referred to the decision of the Hon'ble Gujarat High Court in the case of Maize Products to support the legal position that the reversal of credit was sufficient as per the law. The matter was remanded to the Commissioner(Appeals) for quantifying the credit amount, emphasizing the need for accurate quantification in such cases. The judgment underscored the importance of following legal requirements and providing an opportunity for the appellants to present their case at the adjudicating authority level for a fair resolution of the issue.