Retrospective Rule 6 amendment supports proportionate Cenvat reversal and waiver of remaining pre-deposit

Retrospective amendment to Rule 6 of the Cenvat Credit Rules made proportionate reversal of credit attributable to exempted goods the relevant test where common input services were used for both dutiable and exempted goods. On the facts, the amount already reversed by the assessee was treated as sufficient for purposes of hearing the appeals, and the Tribunal waived the remaining pre-deposit and stayed recovery of the balance demand.

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Issues: Whether, in view of the retrospective amendment to Rule 6 of the Cenvat Credit Rules, the amount already reversed by the assessee was sufficient to justify waiver of the remaining pre-deposit and stay of recovery.

Analysis: The dispute concerned credit taken on common input services used in relation to both dutiable and exempted goods. The Tribunal noted that Rule 6 stood retrospectively amended and that, under the amended position, proportionate reversal of credit attributable to exempted goods was the relevant consideration. On the facts, the amount already deposited was treated as adequate for the purpose of hearing the appeals.

Conclusion: The remaining pre-deposit was waived and recovery of the balance demand was stayed.

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