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TMI Blog2015 (11) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... r authority has not considered quantification of actual amount of Cenvat Credit attributed to the input services used in the manufacture of exempted goods at the time of issuance of show cause notice, Adjudication order and order in appeal, the matter needs to be remitted back to the original authority - Matter remanded back - Decided in favour of assessee. - APPEAL NO. E/739/10 - - - Dated:- 23-6-2015 - Mr. Ramesh Nair, Member (Judicial) For the Petitioner : Shri. Atul Pachkhede, Consultant For the Respondent : Shri. V.K. Shastri, Asstt. Commissioner (A.R.) ORDER Per : Ramesh Nair This appeal is directed against Order-in-Appeal No. YDB/68/Bel/2010 dtd. 4/2/2010 passed by the Commissioner of Central Excise (Appeals), Mumbai, Zone II, wherein Ld. Commissioner (Appeals) sustained the demand confirmed by the original authority in term of Rule 6(3) of CCR, 2004. 2. The facts of the case are that the appellant is engaged in the manufacture of both dutiable and exempted goods. During the audit of factory records of appellant by Central Excise Revenues audit, it was observed that appellant had not maintained separate account of input service for exempted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beginning on 10th Sep 2004 and ending with 31 March 2008 is pending on the date on which Finance Bill 2010 received the assent of the President and notwithstanding anything contained in sub rule (1) and(2) and clause (a) and (b) of sub rule 3, manufacturer availing Cenvat Credit in respect of any input or input service and manufacturing final product which are chargeable to duty and also other final product which are exempted goods may pay an amount equal to Cenvat Credit attributed to input or input services used in or in relation to the manufacture of the exempted goods provided that manufacturer shall pay interest @ 24% per annum till the date of payment of the said amount. He submits that in view of this retrospective amendment, the appellant was required to pay only an amount equal to Cenvat Credit attributable to the input or input services used in or in relation to the manufacture of the exempted goods. Therefore the demand, in terms of said statutory provisions should be restricted only to the actual Cenvat Credit and therefore demand of amount equivalent to 10% of the value of exempted goods is not tenable. He produced Chartered Accountants Certificate of M/s. Hingorani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Consultant, I find that very same issue has been dealt in three judgments wherein it was held has under : (a) SHREE RAMA MULTI TECH LTD. Versus UNION OF INDIA 2011 (267) E.L.T. 153 (Guj.) 14. The dispute in? the present case relates to the entitlement of the petitioners to reverse proportionate amount of credit in respect of the final product carrying nil rate of duty. At the relevant time, in the light of the provisions of Rule 57CC of the Rules, the entitlement of the petitioner to reverse the credit to the extent of common inputs used in the manufacture of goods which carried nil rate of duty was in doubt. However, subsequently, by the introduction of Rule 57CCC of the Central Excise Rules, the situation has been taken care of inasmuch as the said rule which has been given retrospective effect from 1996 provides for reversal of the actual credit by the manufacturer availing credit of specified duty in respect of inputs used for manufacture of final products which are chargeable to duty as also other final product which are not chargeable to duty or chargeable to Nil rate of duty, by payment of amount equivalent to the credit attributable to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inputs used in or in relation to the manufacture of final product which are exempt from the whole duty or chargeable to Nil rate of duty along with other documentary evidence for the relevant period. (iv) If any further credit is required to be reversed, the same shall be reversed within four weeks from the date of receipt of communication from the respondents. Rule is made absolute to the aforesaid extent with no order as to costs. (b) COMMISSIONER OF CENTRAL EXCISE, SALEM-I Versus BURN STANDARD CO. LTD. 2013 (294) E.L.T. 389 (Mad.) 11. Thus, the question that has to be considered is as to whether the reversal of the credit for the month of March 2008 was taken on the basis of the formula provided for and in accordance with Section 73(2) of the Finance Act, 2010. In the decision reported in 2011 (267) E.L.T. 153 (cited supra), the Gujarat High Court considered a similar situation. There printing ink was used in the manufacture of dutiable plastic material and exempted labels and separate account under Rule 57C of the Rules was not maintained. The Gujarat High Court observed as follows : 8. Rule 57C of the Rules laid down that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll pay an amount equivalent to such credit attributable to inputs used in, or in relation to the manufacture of, final products chargeable to nil rate, or no rate, before the clearance of goods. Such assessees would have to make an application for the same within six months of the enactment of the Bill along with documentary evidence and a certificate from a Chartered Accountant or a Cost Accountant certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of final products which are exempted from the whole of the duty or chargeable to Nil rate of duty, within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President. The Finance Bill, 2010 has received the assent of the President on May 2010. Admittedly, the assessee did not make the application on account of the pending proceedings before the Court. Thus, considering the said fact, the High Court pointed out to the contention of the assessee that they were not required to make any such application on account of the reversal of the credit already taken and held that considering the amended Rule as to the availability of the benefit as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s IPCA LABORATORIES LTD Vs COMMISSIONER OF CENTRAL EXCISE, INDORE 6. The appellant used 6 common input services which are used in or in relation to manufacture of dutiable final product as well as exempted final product. During the period of dispute, the total cenvat credit attributable to these common input service is ₹ 15,52,417/-. However, there is no dispute that during previous financial year, the proportion of the turnover of exempted final product was 70% and on this basis during the period of dispute, the appellant have foregone 70% of the cenvat credit in respect of these mix common input services and accordingly, have availed cenvat credit of ₹ 4,65,725/- attributable to the input services used in or in relation to the manufacture of the dutiable final product and have foregone the cenvat credit of ₹ 10,86,692/- in respect of the services used for exempted final product. The point of dispute is and whether just because the appellant did not maintain separate account and inventory of the input services meant for dutiable and exempted final product as per the provision of Rule 6(2), the provisions of Rule 6(3)(b) providing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made and hence, this judgment of Hon'ble High Court is not applicable to the facts of this case. In view of the retrospective amendment introduced by Finance Act, 2010, the appellant were entitled to reverse the proportionate cenvat credit attributable to the quantum of input services used in or in relation to manufacture of exempted final product and by foregoing this credit, they have complied with this obligation. In view of this the impugned order is not sustainable. The same is set aside. The appeal is allowed. From the above judgments it is settled that if the equal amount of Cenvat Credit alongwith interest attributed to the input and input services used in exempted goods is paid alongwith 24% interest compliance of retrospective amendment is made and thereafter no further demand can be made. As regard the application to be made before the departmental authority for availing such benefit. I am of the view that departments role is only of verification of the actual amount to be reversed alongwith 24% interest. Since in the present case the amount alongwith 24% interest stand paid within stipulated time period as provided under the retrospective amendment to Rule 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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