2019 (5) TMI 579 - AT - Central Excise

CENVAT Credit - input used in manufacture of dutiable as well as exempt goods - appellant have reversed the proportionate Cenvat credit attributed to the exempted goods along with interest - whether the appellant is liable to pay 10% as per Rule 6(3)(b) of Cenvat Credit Rules, 2004 or equal Cenvat Credit attributed to the exempted goods? HELD THAT - The period in this case is covered by the amendment in Finance Act 2010 whereby rule 6 was retrospectively amended. Accordingly, the appellant as per the said amendment was required to reverse only proportionate credit attributed to the exempted goods which they have admittedly reversed. This issue has been considered by this Tribunal in the case of M/S GUJARAT INFRAPIPES PVT. LTD. VERSUS COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-II 2016 (1) TMI 268 - CESTAT AHMEDABAD where it was held that Once, the appellant have foregone the proportionate cenvat credit in respect of input services used in or in relation of the manufacture of exempted final product, they have to be treated as complied with the provisions of sub Rule (3) of Rule 6 and hence, there cannot be any demand of amount under Rule 6(3) (b). Thus the appellant is not required to pay 10% of the value of exempted goods and the payment made equal to the cenvat credit is the sufficient compliance of amended Rule 6 retrospectively - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Whether the appellant is liable to pay 10% as per Rule 6(3)(b) of Cenvat Credit Rules, 2004 or equal Cenvat Credit attributed to the exempted goods when the inputs were used in the manufacture of dutiable and exempted goods.

Analysis:
The Revenue filed an appeal challenging the decision of the Commissioner (Appeals) which allowed the appeal based on a previous judgment. The issue revolved around whether the appellant should pay 10% or reverse Cenvat Credit attributed to exempted goods. The appellant manufactured medicaments covered under Rule 6(3A) of Cenvat Credit Rules, which differed from the previous case cited by the Revenue.

Analysis:
The appellant reversed the proportionate Cenvat credit attributed to exempted goods along with interest, as required by an amendment in the Finance Act in 2010. The appellant argued that they complied with the amendment, which mandated only the reversal of proportionate credit. The respondent cited various judgments to support their stance, emphasizing compliance with the law.

Analysis:
Upon careful consideration, the Tribunal noted that the period in question was covered by the retrospective amendment in the Finance Act 2010. The appellant was required to reverse only the proportionate credit attributed to exempted goods, which they had done. The Tribunal referred to a previous case to support this interpretation, highlighting the retrospective applicability of the relevant provisions.

Analysis:
The Tribunal referenced a specific case to establish that the appellant was entitled to reverse the proportionate Cenvat credit attributable to inputs used in the manufacture of exempted final products. The Tribunal emphasized that the appellant's compliance with the obligation to reverse the credit meant that they were not obligated to pay 10% of the value of exempted goods. The impugned order was upheld, and the Revenue's appeal was dismissed.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision based on the arguments presented by both parties and relevant legal precedents.