Tribunal sets aside demand on Cenvat credit reversal, directs interest payment The Tribunal held that the appellant's reversal of Cenvat credit on common input services before the adjudication order complied with the retrospective ...
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The Tribunal held that the appellant's reversal of Cenvat credit on common input services before the adjudication order complied with the retrospective amendment to Rule 6 of the Cenvat Credit Rules, 2004. As a result, the demand for 10% of the value of exempted goods was set aside. The appellant was directed to pay any difference in interest calculated at 24% within four weeks. No penalty was imposed due to the set-aside demand. The appeal was disposed of, and the stay petition was resolved in favor of the appellant.
Issues: Waiver of pre-deposit of duty and penalty amounts under Rule 6(3)(b) of the Cenvat Credit Rules, 2004.
Analysis: The appellant sought waiver of pre-deposit of duty and penalty amounts totaling Rs. 51,98,607/- each. The issue revolved around the payment of 10% of the value of exempted goods cleared from the factory premises. The appellant argued that they had reversed the appropriate Cenvat credit availed on disputed input services, complying with Rule 6 of the Cenvat Credit Rules, 2004. The amendment by the Finance Act, 2010, was deemed retrospective, impacting the case. The appellant highlighted the Eighth Schedule in the Finance Act, 2010, to support their argument.
The appellant had reversed the Cenvat credit on common input services used for both exempted and dutiable products before the adjudication order. The Tribunal agreed that the retrospective nature of the amendment to Rule 6 of the Cenvat Credit Rules, 2004, by the Finance Act, 2010, was applicable. The amendment allowed for the reversal of Cenvat credit attributable to inputs used in exempted goods, subject to payment of interest at 24% per annum. As the appellant had reversed the entire amount on input services, the demand for 10% of the value of exempted goods was set aside. The Tribunal also directed the appellant to pay any difference in interest calculated at 24% within four weeks.
Regarding interest, the retrospective amendment mandated the calculation of interest at 24% per annum, with the appellant required to pay any additional interest within four weeks. Since the demand for the value of exempted goods was set aside, no penalty was imposed on the appellant. The appeal was disposed of accordingly, and the stay petition was also resolved.
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