2018 (12) TMI 925 - AT - Central Excise

Reversal of CENVAT Credit - Rule 6(3) of the CENVAT Credit Rules - It is the case of the Revenue that the appellant had contravened Rule 6(3) of the CENVAT Credit Rules, 2004 in as much as they had not discharged the liability of payment of 10% of the value of exempted goods cleared to the SEZ Developers - Held that - In the case of Fosroc Chemicals (India) Pvt. Ltd. 2014 (9) TMI 633 - KARNATAKA HIGH COURT , it is found that the Hon ble jurisdictional High Court after considering the rival contentions as well as the decisions of various judicial fora, has held that the amendment to Rule 6 vide N/N. 50/2008 dated 31.12.2008 shall have retrospective effect. The impugned demand is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant contravened Rule 6(3) of the CENVAT Credit Rules (CCR), 2004 by not discharging the liability of payment of 10% of the value of exempted goods cleared to SEZ Developers?
2. Whether the amendment to Rule 6 vide Notification No. 50/2008 dated 31.12.2008 shall have retrospective effect?

Issue 1:
The appellant, engaged in the manufacture of Cement and Clinker, cleared cement to units in Special Economic Zones (SEZ) and SEZ Developers without payment of excise duty. The Revenue alleged that the appellant contravened Rule 6(3) of the CENVAT Credit Rules (CCR), 2004 by not paying 10% of the value of exempted goods cleared to SEZ Developers. A Show Cause Notice was issued, demanding payment along with interest and penalty. The lower authorities confirmed the demand, leading to the appeal. The appellant argued that similar issues were decided in favor of taxpayers by the Honorable High Court of Karnataka and presented supporting judgments. The appellate tribunal, after considering the arguments and judgments, found that the impugned demand was unsustainable. The tribunal set aside the order and allowed the appeal, granting consequential benefits if any, as per law.

Issue 2:
The tribunal analyzed the amendment to Rule 6 vide Notification No. 50/2008 dated 31.12.2008 to determine if it had retrospective effect. Referring to the judgment in the case of Fosroc Chemicals (India) Pvt. Ltd., the tribunal noted that the Honorable jurisdictional High Court held that the amendment should be construed as retrospective. The tribunal highlighted the interpretation of the amendment and the reasoning behind its retrospective application. The tribunal also mentioned that the same view was followed in the case of Lotus Power Gears Pvt. Ltd. Based on these findings, the tribunal concluded that the ruling in the Fosroc Chemicals case applied to the present case, leading to the setting aside of the impugned order and allowing the appeal with consequential benefits as per law.