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TMI Blog2025 (4) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Tariff Act, 1985. The aerated drinks manufactured by the appellant are chargeable to excise duty, whereas 'Slice' is exempted from payment of excise duty. During the relevant period, i.e. 2006-07 to 2007-08, the appellant availed Cenvat Credit of service tax paid on services used in relation to manufacture of dutiable goods. The appellant availed the Cenvat Credit of service tax paid on input services of inward freight on transportation of inputs to the factory. The said inputs were used in manufacture of dutiable as well as exempted final products. Subsequently, the appellant realized its mistake and reversed the amount of credit amounting Rs.14,683.70 vide Entry 192 dated 18.08.2008 availed in relation to manufacture of exempt products. During the audit, vide Audit Report dated 16.01.2009, an objection was raised that the Cenvat Credit was availed in respect of input services used in manufacture of dutiable as well as exempted products without maintenance of separate accounts. It was alleged by the department that the appellant is liable to pay an amount equal to 10% of the total price of exempted goods as per Rule 6(3) of the Cenvat Credit Rules, 2004. Based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in 2013 (295) E.L.T. 671 (Mad.)] 4.4 The learned Counsel further submits that vide Section 73 of the Finance Act, 2010, Rule 6 of the Cenvat Credit Rules was amended retrospectively to provide for reversal of credit on proportionate basis with interest. Accordingly, the appellant also paid interest and therefore the appellant is entitled to benefit of retrospective amendment in Rule 6 of the Cenvat Credit Rules made by the Finance Act, 2010. In this regard, he relies on the following cases: * The Principal Commissioner of CGST and Central Excise, Mumbai East Commissionerate Vs Larsen & Toubro Limited (HED), Powai, Mumbai - 2023 (8) TMI 1140 - Bombay High Court * The Commissioner of Central Excise, Mumbai Vs M/s IVP Limited - 2017 (349) E.L.T. 18 (Bom.) * Welspun Corp. Ltd. Vs Commissioner of Central Excise, Kutch - 2019 (368) E.L.T. 179 (Tri. Ahmd.) [admitted in High Court in Commissioner Vs Welspun Corp. Ltd. - 2019 (368) E.L.T. A53 (Guj.)] 4.5 The learned Counsel further submits that there is no dispute with respect to the reversal of the credit availed by the appellant as it has not been disputed by the Adjudicating Authority that the amount reversed was incorrectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression and wilful misstatement on part of the appellant and the issue involves interpretation of the legal provisions. Therefore, extended period of limitation cannot be invoked. In this regard, he relies on the following decisions: * Collector of Central Excise Vs H.M.M. Ltd. - 1995 (76) ELT 497 (SC) * Raj Bahadur Narain Singh Sugar Mills Ltd. Vs Union of India - 1996 (88) ELT 24 (SC) * Air India Ltd. Vs Commissioner of Service Tax, New Delhi - Final Order No. 50245/2024 dated 19.01.2024 - CESTAT New Delhi [affirmed by the Delhi High Court vide order dated 22.10.2024] * The Commissioner of Central Excise and Customs and another Vs M/s Reliance Industries Ltd. And Commissioner of Central Excise and Service Tax Vs M/s Reliance Industries Ltd. - 2023-TIOL-94-SC-CX 4.8 As regards the interest and penalty, the learned Counsel submits when the demand itself is not sustainable, interest and penalty cannot be imposed. 5.1 On the other hand, the learned Authorized Representative for the Revenue reiterates the findings of the impugned order. He further submits that as the appellant did not maintain separate records of inputs and input services pertaining to dutiable and exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f credit amounts to non-availment of credit as held in various cases relied upon by the appellant (cited above in para 4.5). 11. We find that the Tribunal has discussed the identical issue in the case of M/s Star Agriwarehousing & Collateral Management Ltd (supra). Relevant findings are reproduced herein below: "9. We are also of the view that once the proportionate reversal of the Cenvat credit has taken place, that tentamount to not availing of the input services credit of the common inputs which are going into the exempted services. While holding this view we take shelter of the decision of the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. versus Collector of Central Excise, Nagpur - 1996 (81) E.L.T. 3 (S.C.). 10. We also take note of this Tribunal's decision on the same issue in case of M/s The Oberoi Rajvilas versus Commissioner of Central Excise, Jaipur reported under 2018 (5) TMI 1715 - CESTAT New Delhi, the relevant extract of same are reproduced here below :- "9. From the above, we note that the appellant has followed the proportionate method for availment of credit on common input services. It cannot be said that the appellant has availed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules was amended and proportionate reversal of Cenvat Credit was permitted vide Section 73 of the Finance Act, 2010. 14. Further, as regards extended period of limitation, we find that the learned Commissioner confirmed the demand by invoking the extended period, but the department had not established anything on record to show that the appellant has suppressed the material facts with intent to evade the payment of duty. Further, we find that the appellant made the proportionate reversal of Cenvat Credit even before the objection was raised by the department in the audit proceedings and the same is not disputed by the department. Also, the issue involves interpretation and hence, extended period of limitation cannot be invoked as held in various cases relied upon by the appellant (cited above in para 4.7). 15. Regarding the interest and penalty, we hold that since the demand itself is not sustainable, therefore, the question of interest and penalty does not arise. 16. In view of our discussion above, we are of the considered opinion that the impugned order is not sustainable in law, therefore, we set aside the same and allow the appeal of the appellant with consequential relie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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