2011 (3) TMI 1223 - AT - Service Tax

Appellant granted CENVAT credit reversal for exempted product inputs under Finance Act, 2010. Order set aside for reconsideration.

The Tribunal allowed the appellant to reverse CENVAT credit on inputs used for manufacturing exempted products following a retrospective amendment ... Reversal of Cenvat credit - Held that:- As per the retrospective amendment carried out vide Finance Act, 2010, with regard to Rule 6 of CENVAT Credit Rules (CCR), 2004, the reversal of CENVAT credit attributable to the input and input service subject to payment of interest along with a Chartered Account's Certificate is considered as compliance of Rule 6 of CCR, 2004. As per the amendment made in the Finance Act, 2010, the appellant is entitled to take the benefit of the amendment which envisages reversal of input credit taken by them on the inputs which has gone in manufacturing of exempted products - Decided in favor of the assessee by way of remand Issues:Reversal of CENVAT credit on service tax paid for manufacturing exempted and dutiable products.Analysis:The appeal was filed against the order-in-original No. 02/CEX/2008 dated 8.2.2008. The main issue revolved around the reversal of CENVAT credit taken by the appellant for service tax paid on input services used for manufacturing both exempted and dutiable final products. The appellant contended that they had taken the credit on a pro rata basis. However, the adjudicating authority disagreed, confirming the demand raised in the show-cause notice, imposing penalties, and directing the payment of interest on the confirmed amount.Upon careful consideration, the Tribunal found that the issue of reversing CENVAT credit was related to exempted goods cleared by the assessee. A retrospective amendment through the Finance Act, 2010, concerning Rule 6 of the CENVAT Credit Rules, 2004, allowed for the reversal of CENVAT credit linked to inputs and input services, subject to the payment of interest and a Chartered Account's Certificate. The amendment enabled the appellant to benefit from the reversal of input credit on inputs used in manufacturing exempted products. Consequently, the Tribunal set aside the impugned order, remanding the matter to the adjudicating authority to reconsider the issue while adhering to the principles of natural justice. The appeal was disposed of accordingly.