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2015 (11) TMI 372 - CESTAT MUMBAI

2015 (11) TMI 372 - CESTAT MUMBAI - TMI - CENVAT Credit - credit in respect of input service used in the dutiable and exempted goods but by virtue of retrospective amendment in Rule 6 - appellant had not maintained separate account of input service for exempted and dutiable category of goods - Held that:- Since in the present case the amount alongwith 24% interest stand paid within stipulated time period as provided under the retrospective amendment to Rule 6, the only issue left is verification .....

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thereon shall be adjusted from the amount of Cenvat Credit and interest already paid by the appellant. Since the lower authority has not considered quantification of actual amount of Cenvat Credit attributed to the input services used in the manufacture of exempted goods at the time of issuance of show cause notice, Adjudication order and order in appeal, the matter needs to be remitted back to the original authority - Matter remanded back - Decided in favour of assessee. - APPEAL NO. E/739/10 - .....

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the case are that the appellant is engaged in the manufacture of both dutiable and exempted goods. During the audit of factory records of appellant by Central Excise Revenues audit, it was observed that appellant had not maintained separate account of input service for exempted and dutiable category of goods as required under Rule, 6(3)(a) of CCR, 2004. The input service on which Cenvat Credit availed, was used in dutiable as well as excerpted goods, therefore appellant was liable to pay an amo .....

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ction 11AC of the Central Excise Act, 1944. Show cause notice was adjudicated wherein the demand of Cenvat Credit of ₹ 4,61,1154/- was disallowed and appropriated the same against amount of the equal amount already paid and interest ₹ 1,16,936/- was also confirmed and appropriated against the amount already paid. In addition, a penalty of ₹ 4,61,154/- under Rule 15(3) of CCR, 2004 read with Section 11AC of Central Excise Act, 1944 was also imposed. Aggrieved by the said order i .....

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volved in the present case is 2006-07 during which exempted goods were cleared under Notification No. 10/97-CE dated 1/3/1997 on which the 10% demand was raised. It is his submission that the appellant have debited an amount of ₹ 4,61,154/- on 3/5/2008 and also paid interest of ₹ 1,16,936/- on 13/5/2008. The said amounts have been paid before issuance of show cause notice. It is his submission that in terms of retrospective amendment of Rule 6 by Section 73(1) of the Finance Bill, 20 .....

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e and manufacturing final product which are chargeable to duty and also other final product which are exempted goods may pay an amount equal to Cenvat Credit attributed to input or input services used in or in relation to the manufacture of the exempted goods provided that manufacturer shall pay interest @ 24% per annum till the date of payment of the said amount. He submits that in view of this retrospective amendment, the appellant was required to pay only an amount equal to Cenvat Credit attr .....

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,656/- therefore demand is not sustainable. In support of his above submission, he placed reliance on following judgments:- (a) Shree Rama Multi Tech Ltd. Vs. Union of India[2011(267) ELTL 153 (Guj)] (b) M/s. IPCA Laboratories Ltd Vs. Commissioner of Central Excise, Indore [2015-TIOL-1097-CESTAT-DEL] (c) Commissioner of Central excise, Salem-I Vs. Burn Standard Co. Ltd.[2013(294) ELT 389(Mad.)] On the query from the bench that whether application availing benefit of retrospective amendment of Ru .....

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hand, Shri. V.K. Shastri, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. 5. I have considered the submissions made by both sides and perused the record. 6. I find that the appellant have availed the Cenvat credit in respect of input service used in the dutiable and exempted goods but by virtue of retrospective amendment in Rule 6 by Finance Bill, 2010 the appellant was required to pay an equal amount of Cenvat credit in respect of .....

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nance Bill, 2010 received the assent of the President. Therefore dispute involved in the present case must stand settled with the payment of equal mount of Cenvat Credit i.e. ₹ 14,656/- alongwith interest @ 24%. On going through judgment cited by the Ld. Consultant, I find that very same issue has been dealt in three judgments wherein it was held has under : (a) SHREE RAMA MULTI TECH LTD. Versus UNION OF INDIA 2011 (267) E.L.T. 153 (Guj.) 14. The dispute in? the present case relates to the .....

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inasmuch as the said rule which has been given retrospective effect from 1996 provides for reversal of the actual credit by the manufacturer availing credit of specified duty in respect of inputs used for manufacture of final products which are chargeable to duty as also other final product which are not chargeable to duty or chargeable to Nil rate of duty, by payment of amount equivalent to the credit attributable to input used in or in relation to the manufacture of such final products which .....

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d of six months from the date on which the Finance Bill, 2010 receives the assent of the President. 15. Examining the facts of the present case in the light of the newly amended statutory scheme, in the present case the petitioners were bona fide prosecuting theremedy before this Court, hence, pending the petition they have not made any application as contemplated under sub-section (2) of Section 69 of the said Act. It is the case of the petitioners that they are not required to make any such ap .....

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ended by Section 69 of the Finance Act, 2010, the petition is required to be allowed in the following terms: (i) The impugned order dated 30th March 2000 passed by the respondent No. 3, Assistant Commissioner, Central Excise, Ahmadabad is hereby quashed and set aside. (ii) The matter is restored to the file of the Adjudicating Authority who, after giving due opportunity of hearing to the petitioners, shall re-determine the credit taken on the common input, viz., ink, insofar as the same relates .....

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od. (iv) If any further credit is required to be reversed, the same shall be reversed within four weeks from the date of receipt of communication from the respondents. Rule is made absolute to the aforesaid extent with no order as to costs. (b) COMMISSIONER OF CENTRAL EXCISE, SALEM-I Versus BURN STANDARD CO. LTD. 2013 (294) E.L.T. 389 (Mad.) 11. Thus, the question that has to be considered is as to whether the reversal of the credit for the month of March 2008 was taken on the basis of the formu .....

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used in the manufacture of a final product shall be allowed if the final product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty. Rule 57CC of the Rules as it stood at the relevant time made provision for Adjustment of credit if final products are exempted. Under the said rule where a manufacturer was engaged in the manufacture of any final product which was chargeable to duty as well as any other final product which was exempt from the whole .....

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er cent of the price (excluding sales tax and other taxes, if any, payable on such goods) of the second category of final products charged by the manufacturer for the sale of goods at the time of clearance from their factory by adjustment in the credit account maintained under sub-rule (3) of Rule 57G or in the accounts maintained under Rule 9 of sub-rule (1) of Rule 173G or if such adjustment is not possible for any reason, by cash recovery from the manufacturer availing of the credit under Rul .....

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ought in Rule 57CCC, which provided for making such reversal of the entry for the period from September, 1996 to 28th February, 1997, a manufacturer availing credit in respect of any input other than input used as fuel and manufacturing final products chargeable to duty and products not chargeable to duty or chargeable to interest rate, shall pay an amount equivalent to such credit attributable to inputs used in, or in relation to the manufacture of, final products chargeable to nil rate, or no .....

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ich the Finance Bill, 2010 receives the assent of the President. The Finance Bill, 2010 has received the assent of the President on May 2010. Admittedly, the assessee did not make the application on account of the pending proceedings before the Court. Thus, considering the said fact, the High Court pointed out to the contention of the assessee that they were not required to make any such application on account of the reversal of the credit already taken and held that considering the amended Rule .....

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of a certificate from a Chartered Accountant or a Cost Accountant for the relevant period on the amount of input credit attributable to the inputs used in or in relation to the manufacture of final product, which are exempt from the duty, along with the other documentary evidence for the relevant period. 13. We respectfully agree with the decision of the Gujarat High Court reported in 2011 (267) E.L.T. 153 (cited supra). Thus, on the line of reasoning of the Gujarat High Court, we hold that as o .....

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il. The question of such a compliance as on the date of adjudication or filing of the appeal not being there, when the Tribunal felt, on facts, that it was necessary to remand the matter back to the Adjudicating Authority. Thus, we have no hesitation in confirming the order of remand restoring the matter back to the Adjudicating Authority to consider the claim of the assessee. We direct the assessee to produce necessary evidence in the form of certificate from a Chartered Accountant or a Cost Ac .....

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appellant used 6 common input services which are used in or in relation to manufacture of dutiable final product as well as exempted final product. During the period of dispute, the total cenvat credit attributable to these common input service is ₹ 15,52,417/-. However, there is no dispute that during previous financial year, the proportion of the turnover of exempted final product was 70% and on this basis during the period of dispute, the appellant have foregone 70% of the cenvat credit .....

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ted final product as per the provision of Rule 6(2), the provisions of Rule 6(3)(b) providing for payment of an amount equal to 10% of sale value of the exempted final product would be applicable. 6.1. In our view w.e.f. 01.03.2008 Rule 6(3) had been amended to give an additional option to a manufacturer manufacturing dutiable as well as exempting final product by using common cenvat credit availed input/ input services and this additional option was to reverse the proportionate cenvat credit at .....

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Guj = 2011-TIOL-940-HC-AHM-CX has held that even if a separate account have not been maintained, in view of retrospective amendment by Finance Act, 2010, a manufacturer using common inputs in or in relation to manufacture of dutiable as well as exempted final product would be entitled to reverse the proportionate cenvat credit. In view of this position, during the period of dispute the option of paying an amount equal to 10% of the sale value of the exempted goods cannot be forced upon the appel .....

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foregone the proportionate cenvat credit in respect of input services used in or in relation of the manufacture of exempted final product, they have to be treated as complied with the provisions of sub Rule (3) of Rule 6 and hence, there cannot be any demand of amount under Rule 6(3)(b). The judgment of Hon'ble Bombay High Court in case of CCE Thane-I vs. Nicholas Piramal (India) Ltd.(Supra) is of the period when the retrospective amendment to Rule 6(3) by Finance Act, 2010 had not been made .....

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he appeal is allowed. From the above judgments it is settled that if the equal amount of Cenvat Credit alongwith interest attributed to the input and input services used in exempted goods is paid alongwith 24% interest compliance of retrospective amendment is made and thereafter no further demand can be made. As regard the application to be made before the departmental authority for availing such benefit. I am of the view that departments role is only of verification of the actual amount to be .....

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