TMI Blog2023 (3) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt products namely, neutral oil and soap stock emerged from that stage. Neutral oil was further used in the manufacture of exempted goods and soap stock was consumed in manufacture of acid oil, which was a dutiable product. The respondent had availed facility of modvat credit of duty paid on inputs used in the manufacture of acid oil. It had filed a declaration dated 10.02.1998 under the Rule 57-G of the erstwhile Central Excise Rules, 1944 (for short Rules, 1944 ) with the department, wherein the final product was mentioned as acid oil and inputs have been mentioned as, i) caustic soda lye/flakes ii) sulphuric acid and iii) phosphoric acid. In that declaration, no mention was made of Vanaspati Ghee and Refined Oil. It was revealed that phosphoric acid and caustic lye have been used in the manufacure of exempted as well as dutiable goods because the manufacturing process was an integrated process, till it could be differentiated for exempted and dutiable goods. Accordingly, common inputs were used by the respondent in the manufacture of both an exempted as well as dutiable goods. The respondent had not maintained any separate inventory and accounts of the receipt and use of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority for deciding the same afresh. The matter was then adjudicated by the Commissioner, Central Excise Commissionerate vide order dated 23.06.2011 whereby demand of Rs.12,25,95,962/- by invoking the extended period of five years was confirmed and penalty of equivalent amount was imposed. 3. The respondent filed an appeal against the said order before the Tribunal. The said appeal had been allowed by the Tribunal vide order dated 25.04.2018 while holding that the demand of 8% of the value of exempted goods was not maintainable. The Tribunal had observed that the actual amount of cenvat credit availed on common inputs attributable to exempted products had already been reversed by the respondent and differential interest @24% per annum had already been deposited. It was also observed that though at the relevant time, the entitlement of the respondent to reverse the credit to the extent of common inputs used in the manufacture of exempted final products was in doubt, however, due to subsequent insertion of Rule 57CCC in the Rules, 1944, for reversal of actual credit by the manufacturer availing the credit of specified duty in respect of inputs used for manufacture of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er annum and had thereby met the requirement of scheme of retrospective amendment of Section 69 (2) of Finance Act, 2010 (for short 'Act, 2010') and, therefore, it was rightly held by the Tribunal that the demand of 8% of the value of exempted goods was not sustainable. 7. It would be proper to refer to certain relevant provisions. Rule 57-C of the Rules, 1944 laid down that no credit of the specified duty paid on the inputs 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 57 CC of the Rules, 1944 (as it stood at the relevant time) made provision for adjustment of credit if final products were 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 whole of the duty of excise leviable thereon or was chargeable to nil rate of duty and the manufacture took credit of the specified duty on any input which was used or ordinarily used in or in relation to the manufacture of both the aforesaid categories of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. As per Section 69 of the Act, 2010, the amendment was retrospective in nature and a person opting to pay the amount in accordance with the provisions of Rules, 1944, was required to pay the same along with interest specified thereunder. 9. In this case, the respondent reversed cenvat credit attributable to the common inputs used for manufacture of exempted final products by meeting with the requirement of scheme of Section 69 (2) of the Act, 2010 which was retrospective in nature and also paid interest thereon. The respondent was bonafidely prosecuting its remedy before the appropriate forums till the date of reversing the credit. No doubt, the application contemplated under Section 69 (2) of the Act, 2010 had not been moved by it before reversing the credit, but in our opinion, in the light of amended provisions of Rules, 1944, it was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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