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of <h1>Tribunal remands appeal for reconsideration. No reversal of input credit. Decision on 27/04/2023.</h1> <h3>Siemens Ltd Versus Commissioner of Central Excise, Customs & Service Tax, Aurangabad</h3> Siemens Ltd Versus Commissioner of Central Excise, Customs & Service Tax, Aurangabad - TMI Issues Involved:1. Eligibility of CENVAT credit on goods/services for manufacturing exempted goods.2. Requirement to maintain separate accounts for dutiable and exempted goods.3. Applicability of Rule 6 of CENVAT Credit Rules, 2004.4. Retrospective applicability of amendments to Rule 6(5)(vii) of CENVAT Credit Rules, 2004.Summary:Issue 1: Eligibility of CENVAT CreditThe primary issue was whether M/s Siemens Ltd was eligible to take CENVAT credit on goods/services procured for manufacturing and supplying 'excisable goods' without payment of duty under an exemption notification issued under section 5A of the Central Excise Act, 1944. The central excise authorities contended that since the assessee was clearing both dutiable and exempted goods, they were required to maintain separate accounts for 'duty paid inputs' in both streams, failing which they had to reverse credit to the extent of 5% of the value of exempted goods.Issue 2: Requirement to Maintain Separate AccountsThe appellant did not maintain separate accounts as prescribed in Rule 6 of CENVAT Credit Rules, 2004. The Commissioner of Central Excise directed recovery of Rs. 91,09,692 under Rule 14 of CENVAT Credit Rules, 2004, along with applicable interest, and imposed a penalty of Rs. 10,00,000 under Rule 15 of CENVAT Credit Rules, 2004.Issue 3: Applicability of Rule 6 of CENVAT Credit Rules, 2004The dispute centered on the credit attributable to 'inputs' that could not be distinguished at the time of procurement as those that would ultimately be used for manufacturing exempted goods. The appellant argued that goods supplied to eligible projects, not exempted except in the hands of the purchaser, should not be considered 'exempted goods' under Rule 2(d) of CENVAT Credit Rules, 2004, and thus should not require credit reversal under Rule 6(2) or neutralization under Rule 6(3).Issue 4: Retrospective Applicability of AmendmentsThe central excise authorities argued that the exclusion from the obligation to reverse credit attributable to 'inputs'/'input services' for manufacturing goods supplied to eligible 'power projects' came into effect only by the amending notification of 27th February 2010. The appellant, relying on the Karnataka High Court decision in Commissioner of Central Excise & Service Tax, Bangalore v. Fosroc Chemicals (India) Pvt Ltd, contended that the amendment was clarificatory and should be applied retrospectively.Conclusion:The Tribunal acknowledged the intent of 'import substitution' implicit in the privilege of exemption from duties of central excise and the exclusion from reversal. The matter was remanded back to the original authority for reconsideration of all submissions on facts and the ratio of the decision in re Fosroc Chemicals (India) Pvt Ltd. The appeal was allowed by way of remand.Order Pronounced:The order was pronounced in the open court on 27/04/2023.
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