Cenvat credit reversal dispute remanded after pending application for proportionate credit adjustment on common inputs.

A demand confirmed under Rule 6(3)(b) of the Cenvat Credit Rules was set aside because the assessee had already filed a pending application before the Commissioner seeking reversal of proportionate Cenvat credit on common inputs used in both dutiable and exempted final products. As the revenue raised no objection, the matter was remanded for fresh decision after disposal of that application under Section 73 of the Finance Act, 2010.

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Issues: Whether the demand confirmed under Rule 6(3)(b) of the Cenvat Credit Rules was liable to be set aside and the matter remanded for reconsideration in view of the pending application for reversal of proportionate Cenvat credit under Section 73 of the Finance Act, 2010.

Analysis: The demand had been confirmed on the footing that common modvatable inputs were used in the manufacture of both dutiable and exempted final products. The appellant stated that an application had already been filed before the Commissioner for reversal of proportionate credit on the inputs so used, and that the application was still pending. In those circumstances, and since the revenue had no objection, the impugned order was found fit to be set aside and the matter was sent back for fresh decision after disposal of the pending application.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner for decision after considering the application under Section 73 of the Finance Act, 2010.

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