Retrospective input credit reversal rule requires reassessment of common input liability under the amended excise scheme.

Retrospective insertion of Rule 57CCC changed the treatment of common inputs used in manufacturing dutiable and nil-rated goods by providing a mechanism to reverse actual credit attributable to exempted or nil-rated final products. On the facts described, the petitioners had already reversed proportionate credit on the common input, and the matter was required to be assessed under the amended statutory scheme. The adjudicating authority was directed to reconsider the credit liability after giving due opportunity and examining the required certificate and supporting evidence. The existing demand under Rule 57CC was set aside and the issue of attributable credit was remanded for fresh determination.

---

---

Issues: Whether, in view of the retrospective insertion of Rule 57CCC by Section 69 of the Finance Act, 2010, the demand raised under Rule 57CC on common inputs used in the manufacture of dutiable and nil-rated goods could be sustained and the adjudication order required to be quashed with a fresh determination of credit liability.

Analysis: The dispute concerned the effect of the statutory amendment which introduced Rule 57CCC with retrospective operation and provided a mechanism for reversal of actual credit attributable to inputs used in exempted or nil-rated final products. The petitioners had already reversed the proportionate credit on the common input, namely ink, and the amended scheme was treated as governing the controversy. In that setting, the Court held that the matter should be examined under the amended legal regime and that the adjudicating authority should redetermine the amount, if any, after affording due opportunity and considering the required certificate and supporting evidence.

Conclusion: The impugned demand order under Rule 57CC was quashed and the matter was remanded to the adjudicating authority for fresh determination of the credit attributable to the common input in accordance with the amended provisions.

Final Conclusion: The petition succeeded to the extent that the existing adjudication was set aside and the credit liability was directed to be reconsidered under the retrospective amendment, with consequential compliance to follow before the authority.

Ratio Decidendi: Where a retrospective amendment expressly provides for reversal of actual credit attributable to inputs used in nil-rated or exempted final products, the earlier demand under the unamended rule cannot stand without reconsideration under the amended statutory scheme.

---