2017 (12) TMI 436 - AT - Central Excise

CENVAT credit - manufacture of dutiable as well as exempt goods - Held that - even though specifically the appellant had submitted that out of the total credit of ₹ 35,82,694/- the amount of ₹ 30,38,664/- pertains to clearance of dutiable goods and only ₹ 5,54,030/- pertains to clearance of 100% made up articles i.e. exempted goods, therefore, credit availed on inputs attributable to exempted product only to be reversed, no finding has been recorded by the Ld. Commissioner in the impugned order - the matter is remanded to the Adjudicating Authority to ascertain the quantum of credit required to be reversed - appeal allowed by way of remand.

Summary

Issues involved:
1. Appeal against order-in-appeal passed by the Commissioner of Central Excise, Vapi regarding duty demand on manufactured goods.
2. Contention regarding the calculation of credit pertaining to clearance of dutiable and exempted products.
3. Request for remand to the adjudicating authority for verification of credit calculation.
4. Lack of finding by the Commissioner on the actual amount of credit involved in the inputs attributable to the manufacture of exempted products.

Analysis:
The case involves two appeals filed against an order-in-appeal passed by the Commissioner of Central Excise, Vapi, related to the duty demand on goods manufactured falling under Chapter 63 of the Central Excise Tariff Act, 1985. The appellant had cleared articles of 100% cotton and blended fabrics chargeable to duty during a specific period. A demand for recovery of credit amounting to ?35,82,694 was issued due to the use of common inputs in manufacturing both dutiable and exempted products. The demand was confirmed upon adjudication, leading to the present appeals.

The appellant's contention, presented by Advocate S.J. Vyas, focused on the calculation of the credit amount. It was argued that a significant portion of the total credit pertained to clearance of made-up articles that were already cleared on duty payment, while the remaining credit amount related to the clearance of manmade articles of 100% cotton, with a substantial portion being exported. The appellant raised concerns about the lack of specific findings by the adjudicating Commissioner on the actual credit amount attributable to the manufacture of exempted products. The appellant requested a remand to the adjudicating authority for verification of the credit calculation and a re-calculation based on the inputs used for exempted products.

The Revenue's representative had no objection to the appellant's request for a remand. The Member (Judicial) noted that although the appellant had clearly stated the division of credit between dutiable and exempted goods, the Commissioner's order lacked a specific finding on the credit amount related to exempted products. The Member acknowledged the principle of credit reversal but emphasized the need for a precise determination of the quantum of credit to be reversed. Consequently, the matter was remanded to the Adjudicating Authority to ascertain the facts and calculate the credit amount accurately. All issues were kept open, and the appeals were allowed by way of remand.