CENVAT credit re-computation for common inputs used in exempted and dutiable goods; interest claim unsustained on faulty calculation.

CENVAT credit attributable to common inputs used in exempted and dutiable goods had to be computed on the correct methodology, because inputs exclusively used for exempted products were wrongly treated as common inputs. The credit figure therefore required fresh determination, and the matter was remanded for re-computation after hearing the assessee. Since the underlying credit amount was not correctly determined, insistence on interest on that computation could not be sustained. The objection that the order was time-barred was rejected because the order was passed within the relevant period.

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Issues: Whether the amount of CENVAT credit attributable to common inputs used in exempted and dutiable goods was correctly determined and whether interest could be insisted upon on the basis of that computation.

Analysis: The assessee had initially declared only one input as commonly used, but later furnished further details during adjudication. On the material available, the adjudicating authority was not found to have travelled beyond the scope of the proceedings. However, the computation adopted treated inputs exclusively used for exempted products as if they were common inputs used for both exempted and dutiable products. The quantum of credit therefore required re-working on the correct methodology. Since the credit itself had not been correctly determined, insistence on interest on that figure could not be sustained. The objection that the order was beyond time was rejected, as the order had been passed within the relevant period.

Conclusion: The credit amount was held to require fresh determination and the matter was remanded for re-computation after hearing the assessee. The Revenue's challenge was rejected.

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