Tribunal allows appeal on Cenvat Credit dispute. Revenue's appeal dismissed. (3)(b)

The Tribunal allowed the party's appeal, setting aside the demand for the extended period and confirming the reversal of proportionate Cenvat Credit on Inputs for exempted products. The Revenue's appeal challenging the confirmation of duty and penalty was dismissed for lacking merit. The case centered on the dispute arising from the demand for 10% of the value of exempted products due to the lack of separate records, as per Rule 6(3)(b) of CCR 2004, which was deemed unjustified given the appellant's previous reversal of proportionate credit.

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Issues:
- Appeal challenging setting aside demand for extended period
- Appeal challenging confirmation of duty and penalty

Analysis:
1. The case involved two appeals filed against the same Order-in-Original (OIA) passed by the Commissioner of Central Excise and Customs. The Revenue appealed against the setting aside of the demand for the extended period, while the party appealed against the confirmation of duty and penalty.

2. The appellants were involved in manufacturing both dutiable and exempted finished goods, availing Cenvat Credit on Inputs used for both types of goods without maintaining separate records. As a result, they reversed the proportionate Cenvat Credit on Inputs used for exempted products. The dispute arose when the authorities demanded 10% of the value of the exempted products due to the lack of separate records, as per Rule 6(3)(b) of CCR 2004. The Commissioner (Appeals) confirmed the demand for the normal period with an equal amount of penalty.

3. The appellant's advocate argued that since they had already reversed the proportionate Cenvat Credit on Inputs for exempted products, demanding 10% of the value was unjustified. Referring to a previous Tribunal decision considering the retrospective amendment to Cenvat Credit Rules 2004 under the Finance Act 2010, which allowed reversal of proportionate credit for exempted goods, the advocate requested the appeal to be allowed.

4. The Revenue's authorized representative supported the Commissioner (Appeals) findings and appealed on the extended period grounds. The Tribunal noted that previous decisions had allowed appeals where proportionate Cenvat Credit had been reversed for exempted products due to the retrospective amendment in the Finance Act 2010. Since the appellant had already reversed the proportionate credit with interest, the impugned order was set aside, and the party's appeal was allowed. Consequently, the Revenue's appeal was dismissed for lacking merit.

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