2017 (8) TMI 896 - AT - Central Excise

Tribunal Upholds Decision on Cenvat Credit Utilization for Manufacturing

The Tribunal upheld the Commissioner (appeals)'s decision in favor of the respondent, dismissing the Revenue's appeal concerning the utilization of Cenvat ... CENVAT credit - furnace oil (fuel) used in manufacture of both dutiable and non-dutiable goods - Rule 6(3) of CCR - non-maintenance of seperate set of accounts - Held that: - the issue is no longer res Integra and it is squarely covered in their favour in their own case M/s Sharda Forging And Stamping Pvt Ltd Versus Commissioner of Central Excise, Ghaziabad [2015 (10) TMI 1654 - CESTAT NEW DELHI], where it was held that if the assessee reversed proportionate Cenvat credit attributable to final exempted product, in this case the assessee has complied with Rule 6(3) of the Rules, is not required to pay duty equal to 10% of sale price of the exempted final products - appeal dismissed - decided against Revenue. Issues:- Appeal against Order-in-Appeal regarding Cenvat credit on furnace oil for manufacture of dutiable and non-dutiable goods- Applicability of Rule 6(3)(b) of CCR, 2004- Confirmation of proposed demand, interest, and penalty under Rule 14 and 15 of CCR, 2004- Exception under Rule 6(2) and its subsequent amendment- Maintenance of separate accounts for fuel under Rule 6(2)- Demand raised under Rule 6(3)(c) for goods removed duty-free- Compliance with Rule 6(3) in reversing Cenvat credit- Reversal of Cenvat credit attributable to exempted final products- Calculation basis for proportionate credit reversalAnalysis:The case involves an appeal against the Order-in-Appeal concerning the utilization of Cenvat credit on furnace oil for the manufacture of both dutiable and non-dutiable goods, leading to an alleged contravention of Rule 6(3)(b) of the CCR, 2004. The period in question was from May 2005 to August 2007, with a demand amounting to Rs. 15,64,071. The Order-in-Original confirmed the proposed demand under Rule 14 of CCR 2004, along with interest and a penalty under Rule 15. The respondent filed an appeal before the Commissioner (appeals), who allowed the appeal, prompting the Revenue to appeal before the Tribunal.The crux of the issue revolved around the applicability of Rule 6(2) of CCR, wherein an exception existed for fuel used as input until its subsequent amendment. The Tribunal noted that the respondent did not maintain separate accounts for fuel during the relevant period, leading to the demand being rightfully raised under Rule 6(3)(c) based on the percentage of the value of goods removed duty-free.The advocate for the respondent cited a previous case where it was established that the reversal of Cenvat credit attributable to furnace oil for exempted final products was sufficient to comply with Rule 6(3). The Tribunal concurred with this interpretation, emphasizing that the appellant's compliance with reversing proportionate Cenvat credit was key, and there was no requirement to pay duty equal to 10% of the sale price of exempted final products.Furthermore, the Tribunal dismissed the Revenue's appeal, citing that the issue was already settled in the respondent's favor based on previous findings. The respondent was granted consequential benefits, and cross objections/applications were also disposed of accordingly.