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2023 (3) TMI 7 - HC - Central ExciseReversal of proportionate input tax credit - whole quantity of inputs used in the manufacture of dutiable as well as exempted products - non-maintenance of separate records - requirement to pay an amount equal to 8% of the price of the exempted goods, charged by it for sale of exempted goods at the time of their clearance from its factory as per Rule 57CC (1) of the Rules, 1944. HELD THAT:- The Rules, 1944 were subsequently amended vide Section 69 of the Act, 2010 and Rule 57 CCC was inserted. As per Section 69 sub-Section 1 of the Act, 2010, the Rules, 1944 shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in Column (3) of the Fourth Schedule, on and from and up to the corresponding date specified in column (4) of that Schedule. As per sub-Section 2, where a person opts to pay the amount in accordance with provisions of Rules, 1944 as amended by Sub-Section (1), he shall pay the amount along with interest specified thereunder and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of the final products, which are exempted from whole of the duty of excise leviable thereon 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 respondent was admittedly maintaining a common inventory/account of receipt and use of the said common inputs. The dispute related to maintenance of separate accounts and inventory of the inputs meant for exempted final products as well as dutiable final products. The respondent reversed the modvat credit amounting to Rs.4,51,574/- on proportionate basis in respect of the inputs used in the manufacture of exempted final products and also paid interest @24% per annum on the amount of reversed credit during the pendency of the appeal pending before the Tribunal earlier. By way of amendment in the Act, 2010, the Rules, 1944 were amended and Rule 57 CCC was inserted for reversal of actual credit by the manufacturer availing the credit of specified duty in respect of inputs used for manufacture of final product, which was chargeable to duty or chargeable to nil rate of duty by payment of amount equivalent to amount of credit attributable to inputs used in the manufacture of such final products. Undoubtedly, the respondent herein had not moved any application while opting to reverse the proportionate credit within six months of enactment of Finance Bill, 2010 along with documentary evidence and certificate from Chartered Accountant as required under Rule 57 CCC of the Rules. However, since all this happened during the pendency of the proceedings while the respondent had been still prosecuting its remedies, therefore, it cannot be stated that the respondent had not complied with the requirement of scheme of retrospective amendment of Section 69 (2) of the Act, 2010. As such, the learned Tribunal had rightly set aside the demand of the appellant of tax of 8% of value of exempted goods. Appeal dismissed.
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