2012 (8) TMI 211 - AT - Central Excise

Common modvatable / cenvatable inputs in the manufacture of dutiable as also exempted final products. - demand provisions of Rule 6(3)(b) of Cenvat Credit Rules - held that - matter remanded back.

Summary

Issues:
1. Confirmation of demand under Rule 6(3)(b) of Cenvat Credit Rules.
2. Application for reversal of proportionate Cenvat credit pending before Commissioner.
3. Remand of the matter to the Commissioner for de novo consideration.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi, involved the confirmation of demand against the appellant under Rule 6(3)(b) of Cenvat Credit Rules. The tribunal, after dispensing with the pre-deposit condition, proceeded to hear the appeal. The demand was upheld based on the appellant's use of common modvatable inputs in manufacturing both dutiable and exempted final products. The appellant had moved an application before the Commissioner for the reversal of proportionate Cenvat credit on the inputs used, as per Section 73 of the Finance Act. The tribunal noted that this application was still pending before the Commissioner. Consequently, the tribunal, with the consent of both sides, set aside the impugned order and remanded the matter to the Commissioner for a fresh decision after considering the appellant's application for credit reversal. The stay petition and appeal were disposed of accordingly, along with the cross-objection.

This judgment highlights the importance of compliance with Cenvat Credit Rules and the implications of using common inputs for both dutiable and exempted products. It also underscores the procedural aspect of seeking reversal of Cenvat credit under the Finance Act and the authority of the Commissioner to decide on such applications. The tribunal's decision to remand the matter for de novo consideration emphasizes the need for a thorough review of the appellant's application before reaching a final decision. Overall, the judgment provides clarity on the process to be followed in cases involving Cenvat credit disputes and the role of the Commissioner in resolving such matters effectively.