Appeal success due to retrospective amendment in Cenvat Credit Rules. Compliance and record-keeping critical.

The appellant appealed against a demand under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 for availing credit on common inputs used in manufacturing both dutiable and exempted goods. The Tribunal noted that the rule had been retrospectively amended, allowing manufacturers to opt for reversal of credit for inputs used in exempted goods. The impugned order was set aside, and the matter was remanded for fresh consideration by the adjudicating authority in light of the retrospective amendment. This case emphasizes the importance of complying with amended rules and maintaining proper records for availing credits under the Cenvat Credit Rules.

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Issues involved: Interpretation of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 regarding availing credit for common inputs used in manufacturing both dutiable and exempted goods.

Summary:

Issue 1: Interpretation of Rule 6(3)(b) of the Cenvat Credit Rules, 2004
The appellant appealed against the demand confirmed under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, for availing credit on common inputs used in manufacturing both dutiable and exempted goods. The Revenue argued that due to the lack of separate accounts for inputs used in exempted goods, the appellant is liable to pay 10% of the price of the exempted goods. However, the Tribunal noted that Rule 6 has been retrospectively amended by the Finance Act, 2010, allowing manufacturers to opt for reversal of credit for inputs used in exempted goods. Therefore, the impugned order was set aside, and the matter was remanded for fresh consideration by the adjudicating authority in light of the retrospective amendment after providing an opportunity of hearing to the respondent.

This judgment highlights the importance of compliance with the amended rules and the need for manufacturers to maintain proper records for availing credits under the Cenvat Credit Rules.

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