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2024 (3) TMI 975 - CESTAT AHMEDABADManner of computation of proportionate reversal of credit determined under Rule 6(3A) of the Rules - Interpretation of statute - Rule 6(3A)(b)(ii) of CCR - Cenvat credit on inputs and input services used for manufacture of LPG & SKO - contention of the department is that for the purpose of reversal, the “Total Cenvat Credit Taken on Input and Input services” should be considered while the contention of the appellant is that “Total Cenvat credit taken on Input and Input services” should include only common Input and Input services used in exempted manufactured goods - HELD THAT:- It would be clear from a conjoint reading of sub-rules 6(1), (2) and (3) of Rule 6 that the total Cenvat credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input and input service and cannot include Cenvat credit on input and input service exclusively used for the manufacture of dutiable goods. If the interpretation of the Revenue is accepted, then the Cenvat credit of part of Input and Input service even though used in the manufacture of dutiable goods, shall stand disallowed, which is not provided under any of the Rule of Cenvat Credit Rules, 2004. The Government has substituted the sub-rule (3A). The legislators very consciously substituted the Rule with intention to give a clarificatory nature to the provision of sub-rule (3A) so as to make it applicable retrospectively. It was all along not the intention of the Government to deny Cenvat credit on the input/input service even though used in the dutiable goods. Keeping the said view in mind, the substitution in sub-rule (3A) of Rule 6 was made. Therefore, the substituted provision of sub-rule (3A) shall have retrospective effect being clarificatory. In the case of GOVERNMENT OF INDIA VERSUS INDIAN TOBACCO ASSOCIATION [2005 (8) TMI 113 - SUPREME COURT], the Hon’ble Supreme Court held that “the word “substitute” ordinarily would mean “to put (one) in place of another”; or “to replace” - As per the interpretation of the Hon’ble Supreme Court, the sub-rule (3A) being substitution shall have a retrospective effect and will be applicable for all time since when the Rule was enacted. Therefore, for this reason also, for the purpose of calculation of Cenvat credit reversal, in the formula, total Cenvat credit shall mean credit of only common input and input service and not of input and input service exclusively used for the manufacture of dutiable product on which the Cenvat credit is eligible to the appellant in its entirety. Availment of Cenvat credit on inputs and input services used for manufacture of LPG & SKO - HELD THAT:- The issue is no more res integra in view of the Hon’ble High Court of Gujarat decision in the case of RELIANCE INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI [2022 (11) TMI 923 - CESTAT MUMBAI], wherein the Hon’ble High Court has held that LPG is a by product generated in the process of refining and no reversal is required in this matter. Since the issue decided in respect of above by-products in above terms, it is not required to deal with issues of what value to be considered for reversal. The impugned order is set aside. Appeal is allowed.
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