2017 (6) TMI 363 - AT - Central Excise

Reversal of CENVAT credit - recovery the 10% of the value of the exempted goods - appellants were using common inputs/input services and capital goods in the manufacture of goods cleared on payment of duty as well as goods cleared to SEZ Developers under exemption without payment of duty and were not maintaining separate accounts - clearance to SEZ - Held that - In terms of sub-rule (6) of Rule 6 of CCR, the provision of sub-rule (1), (2), (3) & (4) of Rules 6 are not applicable in respect of the goods cleared to SEZ Developers - In this case, the goods were cleared to contractor of the Developers of SEZ. The amendment including the Developer of SEZ for inserting or to a developer of special economic zone for their authorized operations was made on 31.12.2008 - the amendment in Rules 6 (6) (i) of Cenvat Credit Rules was clarificatory in nature and will apply retrospectively - the provision of Rules 6 (1), (2), (3) & (4) of CENVAT Credit Rules are not applicable in the instant case. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Cenvat Credit Rules regarding the clearance of goods to SEZ Developers without payment of duty.
2. Applicability of Rule 6(3)(i) of CCR, 2004 in the case of common inputs used for goods cleared with and without payment of duty.
3. Retrospective application of the amendment to Rule 6(6)(i) of Cenvat Credit Rules made on 31.12.2008.

Analysis:
1. The case involved a dispute regarding the clearance of goods to SEZ Developers without payment of duty and the applicability of Cenvat Credit Rules. The appellant, engaged in manufacturing Pipe Fittings, cleared goods to a contractor for SEZ Developers without maintaining separate accounts for common inputs. The Revenue contended that the appellant should have maintained separate records for such clearances as per Rule 6(3)(i) of CCR, 2004.

2. The Revenue argued that the goods cleared to SEZ Developers were exempted goods under CCR 2004, and the appellant should have maintained separate records for such clearances. The appellant, on the other hand, relied on judgments from different High Courts, including UOI Vs. Steel Authority of India Ltd. and CCE Vs. Dee Development Engineers Pvt. Ltd., to support the contention that the amendment to Rule 6(6)(i) was clarificatory in nature and should be applied retrospectively.

3. The Tribunal examined the records and referred to the judgment of the High Court of Chhattisgarh, which held that the amendment to Rule 6(6)(i) of Cenvat Credit Rules was clarificatory and should be applied retrospectively from the date the rules were enforced. The Tribunal followed the precedents set by the High Courts of Chhattisgarh and Punjab & Haryana, concluding that the provision of Rules 6(1), (2), (3), and (4) of Cenvat Credit Rules were not applicable in the case. Therefore, the appeal filed by the Revenue was dismissed.

This detailed analysis of the legal judgment addresses the issues involved in the interpretation of Cenvat Credit Rules, the application of Rule 6(3)(i) of CCR, 2004, and the retrospective effect of the amendment to Rule 6(6)(i) of Cenvat Credit Rules made on 31.12.2008.