2015 (10) TMI 1692 - AT - Service Tax

Appellate tribunal remands appeal for review, directs reasonable opportunity for appellant.

Coromandel Fertilizers Ltd. Versus Commissioner of Central Excise, Chennai-I

Coromandel Fertilizers Ltd. Versus Commissioner of Central Excise, Chennai-I - TMI Issues:Reversal of input service credit used in exempted and dutiable final products.Analysis:The issue in this case revolves around the reversal of cenvat credit availed on input services used for the manufacture of both exempted and dutiable final products under rule 6(3)(b) of CCR. The appellants, who are manufacturers of fertilizers, were demanded a significant amount by the adjudicating authority for the reversal of credit used in exempted goods. The crux of the matter lies in whether the input services were exclusively used in the manufacture of exempted goods or were utilized for both exempted and dutiable products, such as Phospho Gypsum cleared on payment of duty. The appellant's senior counsel argued that they had already reversed the entire credit in compliance with the law and had filed an application for consideration of the retrospective amendment made in Section 73(1) of the Finance Act. On the other hand, the learned A.R. contended that the appellants were not eligible for credit as they had not maintained separate accounts for input services used in both exempted and dutiable goods.The adjudicating authority's findings highlighted that the appellant had not obtained an order from the Commissioner regarding the reversal of duty and interest paid, which was necessary for granting relief. The authority emphasized that the input services were exclusively used in the manufacture of exempted goods, as per the Board's circular, making the appellants liable to reverse the entire credit. However, if the input services were used for both exempted and dutiable products, the appellants were entitled to reverse only the proportionate credit as per the retrospective amendment to Section 73. The application filed by the appellants before the Commissioner was crucial in this context, as it demonstrated their compliance with the law. The adjudicating authority failed to consider this application before passing the impugned order, leading to the conclusion that the case needed to be remanded for further consideration.In light of the above analysis, the appellate tribunal set aside the impugned order and remanded the appeal to the Commissioner of Central Excise for a thorough review of the application dated 19.8.2010 and the records submitted by the appellants. The tribunal directed the adjudicating authority to provide a reasonable opportunity to the appellant before making a decision. The decision to remand the case was based on the fact that the application made under sub-section (2) of Section 73 was still pending before the adjudicating authority, indicating the need for a proper review and consideration of all relevant factors before reaching a final decision.