2019 (1) TMI 1578 - AT - Central Excise

Tribunal Upholds Appellant's Compliance with Retrospective Amendment on CENVAT Credit Reversal

ITC Limited Versus CCE, C &ST, Hyderabad-III

ITC Limited Versus CCE, C &ST, Hyderabad-III - TMI Issues involved:Demand of 10% amount on exempted goods, CENVAT Credit reversal, retrospective amendment to Rule 6 of CCR 2004, penalty imposition, interest payment.Analysis:1. Demand of 10% amount on exempted goods:The appeal addressed the issue of demanding an amount equivalent to 10% of the value of exempted goods cleared during a specific period. The appellant had availed CENVAT Credit for common inputs used in both exempted and dutiable goods without maintaining separate accounts. The authorities alleged liability due to the lack of separate accounts and issued a show cause notice. The appellant reversed the CENVAT Credit before the adjudication order, but both lower authorities concluded that the reversal was insufficient. However, a retrospective amendment to Rule 6 of CCR 2004 clarified that reversal of credit attributable to inputs used in exempted goods is sufficient. The tribunal upheld the appellant's position based on this amendment.2. CENVAT Credit reversal:The appellant had reversed a proportionate amount of CENVAT Credit on inputs utilized for exempted goods. The tribunal found this reversal in compliance with the retrospective amendment, leading to the setting aside of the demand equivalent to 8% of the exempted goods' valuation. However, the appellant's failure to pay interest on the reversed amount on the specified date led to the tribunal denying relief on the penalty imposed.3. Retrospective amendment to Rule 6 of CCR 2004:The tribunal applied the retrospective amendment to the case, emphasizing that the appellant's reversal of CENVAT Credit on inputs used for exempted goods aligned with the amendment's requirements. This application of the amendment played a crucial role in the tribunal's decision to set aside the demand and penalty, except for the interest payment.4. Penalty imposition and interest payment:While the tribunal accepted the appellant's compliance with the retrospective amendment regarding CENVAT Credit reversal, the failure to pay interest on the reversed amount resulted in the tribunal upholding the penalty imposition. The appellant was deemed not entitled to relief on the penalty due to the non-payment of interest as required.In conclusion, the tribunal's decision in the appeal addressed the issues of CENVAT Credit reversal, retrospective amendment application, penalty imposition, and interest payment. The appellant's compliance with the retrospective amendment regarding CENVAT Credit reversal led to the setting aside of the demand, except for the penalty due to non-payment of interest.