Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
🚨 Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
⚠️ This portal will be discontinued on 31-07-2025
If you encounter any issues or problems while using the new portal,
please
let us know via our feedback form
so we can address them promptly.
Home
2019 (8) TMI 1874 - AT - Central ExciseCENVAT Credit - use of input services in common for manufacture of both exempted as well as dutiable goods - not maintaining separate accounts in respect of the input services used - applicability of Rule 6(3) of CENVAT Credit Rules 2004 - reversal of entire amount proportionate credit along with interest due even prior to issuance of show cause notice - HELD THAT - Courts and Tribunals have time and again while interpreting the scope of Rule 6 of CENVAT Credit Rules 2004 concluded to state that in so circumstances the said rule should be used as a measure to extract illegal amounts from the assessee. The scope of Rule 6 is limited to the extent that assessee do not get the undue benefit by availing the CENVAT Credits in respect of the exempted goods manufactured by him or the exempted services provided by him. Taking note of the fact that appellants had reversed the entire amount proportionate credit along with interest due in respect in respect of the period 01.04.2008 to 31.12.2010 (Rs 1, 22, 98, 068/ Rs 17, 49, 730/-) even prior to issuance of show cause notice there are no merits in the demands made post 1st April 2008 and the same is set aside. For the period prior to 1st April 2008 it is found that as per the law as it existed during the relevant period appellant was required to pay 10% of the value of exempted goods if he was not in position to maintain separate account in respect of the inputs/ input services used for manufacturing both exempted and dutiable goods. Interpreting the erstwhile rule 57CC of Central Excise Rules 1944 Hon ble Supreme Court has in case of UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. 2014 (5) TMI 253 - SUPREME COURT held Rule 57CC requires an assessee to maintain separate records for inputs which are used in the manufacture of two or more final products one of which is dutiable and the other is non-dutiable. In that event Rule 57CC will apply. The benefit of proportionate reversal has been extended from retrospective effect in cases where common inputs/ input services were used for manufacture of dutiable and exempt products. In our view the intention behind the amendment made is quite obvious. The assessees have been allowed to proportionately reverse the credit attributable to inputs/ input services used for manufacture of exempted goods in cases where common inputs/ input services are used or manufacture of both dutiable and exempted goods - the case of appellants for the periods 2006-07 and 2007-08 is covered by the amendments made by way of insertion of sub-rule (7) in Rule 6 of the CENVAT Credit Rules 2002. Impugned order set aside - appeal allowed.
|