9911796707
TMI Blog2023 (1) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit Rules, 2004 [the 2004 Credit Rules] with interest and penalty. It needs to be noted that the Commissioner (Appeals) set aside the confirmation of demand of central excise duty with penalty and interest on account of incorrect valuation of goods sold to related persons for the period 2014-2015 to 2018-2019. 2. The appellant, which is a joint venture between GAIL (India) Ltd [GAIL] and Hindustan Petroleum Corporation Ltd [HPCL], is engaged in the manufacture of Compressed Natural Gas [CNG]. For this purpose, the appellant procures natural gas from GAIL through pipelines. Part of this gas is used by the appellant for producing CNG at various CNG stations. CNG is also cleared by the appellant on payment of central excise duty. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the common input services for the purpose of such reversal. Thus, it was alleged that such computation adopted by the appellant resulted in short reversal of the amount determined under rule 6(3A) (b) (iii) of the 2004 Credit Rules, which would be recoverable along with interest and penalty." 6. Accordingly, a show cause notice dated 20.03.2019 was issued to the appellant proposing to recover central excise duty with interest after invoking the extended period of limitation contemplated under section 11(A)(4) for the Central Excise Act, 1944 on the incorrect valuation adopted for sale of CNG to HPCL. The show cause notice further proposed recovery of short reversed proportionate CENVAT credit under rule 6 of the 2004 Credit Rules with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized representative appearing for the department. The Tribunal, after referring to their relevant provisions of rule 6 (3A) of the 2004 Credit Rules, as it stood at the relevant time, observed in Natural Steel and Agro Industries as follows: " 30. To appreciate this issue, Rule 6 must be read as a whole while interpreting this formula. Rule 6(1) prohibits any credit on inputs and input services used in or in relation to exempted goods or exempted services. The rationale of this provision is evident. CENVAT credit enables one to use the credit to reduce duty or tax liability on the output goods or services. If they are not chargeable to duty or tax, one cannot take credit either. However, there are those who produce both dutiable and exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by Rule 6(2). We do not find anything in the CENVAT Rules which prohibits an assessee from following Rule 6(2) in respect of the inputs and input services where it is feasible to maintain separate records and follow Rule 6(3A) in case of such inputs or input services where it is not feasible to do so. It would have been a different situation if the appellant had not followed Rule 6(2) at all and took credit on all the inputs and input services regardless of whether they are attributable to the manufacture of dutiable goods or provision of exempted services. Then the total CENVAT credit taken during a year would have included all the CENVAT credit taken." 11. After placing reliance on the decision of the Ahmadabad Bench of this Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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