Retrospective Cenvat Credit amendment allowed regularisation of common input service liability, with interest still payable

Common input services used for both dutiable and exempted goods triggered a demand for failure to maintain separate accounts under the Cenvat Credit Rules, 2002. The retrospective amendment introduced by the Finance Act, 2010 was treated as applicable to the dispute, and the assessee had already moved to regularize the liability in the statutory manner contemplated by that amendment. The demand could therefore not be sustained in its confirmed form, although interest for delayed payment remained payable. The liability was remanded for fresh determination under the amended legal position.

---

---

Issues: Whether the assessee could discharge the demand raised for non-maintenance of separate accounts in respect of common input services by taking recourse to the retrospective amendment brought in by the Finance Act, 2010, and whether the matter required remand for re-determination of liability.

Analysis: The demand arose from availment of credit on common input services used for both dutiable and exempted products without maintaining separate accounts under Rule 6(2) of the Cenvat Credit Rules, 2002. The amendment introduced by the Finance Act, 2010 was treated as applicable to the controversy, and the record showed that the assessee had already moved to discharge the liability in the manner contemplated by that amendment. The revenue did not dispute that the assessee could adopt the statutory procedure, though interest for delayed payment remained payable. In these circumstances, the confirmed demand could not be sustained as such and the liability had to be reconsidered under the amended legal position.

Conclusion: The assessee was entitled to have the liability regularized in accordance with the amended provisions, and the matter was remanded to the Commissioner for fresh determination of liability under law.

---