Tribunal Upholds CENVAT Credit Rulings on Common Inputs, Rule 6 Compliance, Precedents

The Tribunal allowed the appeal in the case concerning availing CENVAT credit on common inputs for manufacturing dutiable goods, emphasizing compliance with record-keeping requirements and non-availment of credit for exempted goods under Rule 6. The appellant's method was deemed acceptable, with precedents supporting their approach. In another related case, the Tribunal dismissed the appeal seeking reversal of CENVAT credit due to a retrospective amendment to Rule 6, citing compliance with the rule and rendering the appeal infructuous based on a prior decision.

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Issues:
1. CENVAT credit availed on common inputs for manufacturing dutiable and exempted goods.
2. Reversal of CENVAT credit on common inputs due to retrospective amendment to Rule 6 of CENVAT Credit Rules, 2004.

Analysis:
1. Issue 1 - CENVAT credit availed on common inputs for manufacturing dutiable and exempted goods:
The appellant, engaged in manufacturing bulk drugs and drug intermediates, availed CENVAT credit on common inputs based on actual consumption for dutiable products. The authorities alleged non-maintenance of separate records for inputs used in dutiable and exempted goods. The appellant contended that they maintained batch records to track consumption for dutiable products. The lower authorities imposed penalties, which the appellant challenged. The Tribunal found the appellant's method of correlating input consumption with manufacturing and clearances of dutiable products acceptable. The appellant's compliance with Drugs and Cosmetics Act for maintaining consumption records was noted. The Tribunal emphasized Rule 6's focus on non-availment of credit for exempted goods. Precedents like IPCA Laboratories Ltd and Gland Pharma Ltd supported the appellant's approach. The Tribunal held the impugned order unsustainable and allowed the appeal.

2. Issue 2 - Reversal of CENVAT credit on common inputs due to retrospective amendment to Rule 6:
In Appeal No.E/941/2012, the appellant sought reversal of CENVAT credit on common inputs following a retrospective amendment to Rule 6. The appellant's counsel argued that the appellant complied with Rule 6(2) and 6(3) by availing credit only for dutiable goods and reversing credit for exempted goods. The Departmental Representative contended that the appellant did not maintain separate records for dutiable and exempted goods' inputs. The Tribunal found the appellant's method scientific and compliant with Rule 6. Citing the case of Foods Fats and Fertilizers Ltd, the Tribunal dismissed Appeal No.E/941/2012 as infructuous, as the decision in Appeal No.E/2253/2010 rendered it academic. The appeals were disposed of accordingly.

In conclusion, the Tribunal upheld the appellant's method of availing CENVAT credit on common inputs for dutiable goods, emphasizing compliance with record-keeping requirements and the non-availment of credit for exempted goods as per Rule 6. The retrospective amendment to Rule 6 did not affect the appellant's approach, leading to the setting aside of the impugned order and dismissal of the second appeal as infructuous.

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