2012 (7) TMI 293 - AT - Central Excise

Tribunal upholds legality of order on exempted goods; assessee compliant with Rule 6

The Tribunal rejected the Revenue's appeal, upholding the legality of the impugned order regarding the reversal of 10% value of exempted goods cleared ... Cenvat credit - Reversal of 10% value of the exempted goods cleared by the appellants, manufactured by using common inputs - Adjudication authority has held that reversal of cenvat credit on the inputs itself is enough and sufficient for compliance of the provisions of Rule 6 of Cenvat Credit Rules, 2004 and - proceedings initiated by show cause notice for recovery of 10% of the value of the exempted goods cleared from the factory premises dropped - order is correct and legal and does not suffer from any infirmity - Appeal filed by the Revenue is rejected Issues:Reversal of 10% value of exempted goods cleared using common inputs.Analysis:The appeal was filed by the Revenue against Order-in-original No. 20/Commissioner/2006 dated 29.6.20062. The issue at hand pertains to the reversal of 10% value of exempted goods cleared by the appellants, which were manufactured using common inputs. Upon reviewing the records, it was noted that the respondent had already reversed the entire amount of cenvat credit taken by them before the original adjudicating authority's order was issued. The adjudication authority determined that the reversal of cenvat credit on the inputs sufficed for compliance with Rule 6 of Cenvat Credit Rules, 2004. Citing the case of Kudremukh Iron & Steel Limited, the Hon'ble High Court of Karnataka upheld the law's proposition, allowing the assessee to meet the rule's provisions by only reversing the proportionate credit based on the inputs utilized in manufacturing exempted final products. The Senior Counsel confirmed that they would not seek a refund of any excess amounts already reversed. Consequently, the Tribunal found the impugned order to be legally sound, without any defects.In conclusion, the Tribunal rejected the appeal filed by the Revenue, affirming the correctness and legality of the impugned order.