TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the demand was barred by limitation in the absence of suppression of facts. (ii) Whether further demand equivalent to 8% of the value of exempted goods was sustainable when credit had already been reversed on a pro rata basis at the time of clearance.
Issue (i): Whether the demand was barred by limitation in the absence of suppression of facts.
Analysis: Clearances were made under exemption against CT-2 certificates in accordance with the procedure under the Central Excise (Removal of the Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. The credit reversed on a pro rata basis was disclosed in the invoices and the department was aware of the exempted clearances and the quantum of reversal. In these circumstances, the extended period could not be invoked and a notice issued beyond the normal period of one year was time-barred.
Conclusion: The demand was barred by limitation and the issue was decided in favour of the assessee.
Issue (ii): Whether further demand equivalent to 8% of the value of exempted goods was sustainable when credit had already been reversed on a pro rata basis at the time of clearance.
Analysis: Since the appellant had reversed the actual credit attributable to the inputs used in exempted goods at the time of clearance, no additional amount under Rule 6 of the Cenvat Credit Rules, 2002 was payable. The reasoning followed the principle that reversal of credit before utilization satisfies the requirement, even if the reversal occurs after clearance of the goods.
Conclusion: The additional demand under Rule 6 was not sustainable and the issue was decided in favour of the assessee.
Final Conclusion: The impugned order was set aside and the appeal succeeded on both limitation and merits.
Ratio Decidendi: Where exempted clearances and proportionate reversal of credit are disclosed to the department, the extended period cannot be invoked for want of suppression, and no further demand under Rule 6 survives once the attributable credit has been reversed.
TaxTMI 
TaxTMI 
