2018 (6) TMI 310 - AT - Central Excise

CENVAT credit - demand of an amount equivalent to 6% of the value of exempted goods/non-excisable goods - common input services used in manufacture of taxable as well as exempt goods - non-maintenance of separate records - Held that - The explanation inserted by N/N. 06/2015-CE (NT) dated 01/03/2015 to Rule 6 of CCR 2004 does not indicate whether it is retrospective amendment and the period involved in the case in hand is March 2008 to October, 2012 - the first appellate authority should have considered the various factual contentions made by appellant before him in the appeal and should not have disposed of the appeal based upon only on the insertion of the explanation which is not covering the period in question in this appeal - matter back to the first appellate authority to reconsider the issue afresh after following the principles of natural justice - appeal allowed by way of remand.

Summary

Issues involved:
Demand of an amount equivalent to 6% of the value of exempted goods/non-excisable goods due to common input services usage without separate accounts.

Analysis:
The appeal was against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune - II. The issue revolved around the demand for an amount equivalent to 6% of the value of exempted goods/non-excisable goods manufactured by the appellant, who allegedly used common input services like 'GTA service' and 'repair and maintenance service' for boilers without maintaining separate accounts. The Revenue claimed that due to the consumption of these services in the factory premises, the appellant needed to reverse the amount equivalent to 6% of the value of the steam sold. The appellant argued that they did not avail CENVAT credit for service tax paid on repairs and maintenance of the boiler and that the GTA service was used solely for transporting sugar cane. The adjudicating authority held that Rule 6(3) applied, which the appellant contested before the first appellate authority. However, the first appellate authority rejected the appellant's contentions solely based on an explanation inserted by notification No. 06/2015-CE (NT) to Rule 6 of CENVAT Credit Rules, 2004, without delving into the merits of the case. The Tribunal noted that the said explanation did not specify if it was retrospective, and the period in question was from March 2008 to October 2012. The Tribunal opined that the first appellate authority should have considered the factual contentions raised by the appellant instead of relying solely on the inserted explanation. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the first appellate authority for reconsideration, emphasizing the need to follow the principles of natural justice.