2023 (9) TMI 11 - AT - Central Excise

Tribunal allows appeal, dismisses demand for payment under Rule 6 of Cenvat Credit Rules

Ref Cem Industries Versus Commissioner of Central Excise & ST, Rajkot

The Tribunal set aside the order-in-original, ruling that the appellant's reversal of Cenvat credit with interest complied with Rule 6(3). The appeal was ... Reversal of cenvat credit - credit attributable to exempted goods - SSI exemption - goods manufactured without brand name - clearing the goods on payment of Central Excise duty on the branded product namely 'ACE’ brand fire bricks - applicability of N/N. 8/2003-CE dated 01.03.2003, as amended - HELD THAT:- The appellant has already reversed the Cenvat credit availed by them before the matter came to be adjudicated - It is also found that appellant have submitted Chartered Accountant certificate dated 30.01.2010 wherein a month wise break-up of common inputs reversed by them has been given. The department has not verified this fact and has simply proceeded in confirming the duty at the rate 8%/ 10% of the value of exempted goods, which we find that as per various legal pronouncements, is not sustainable. Since the Hon’ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT] has held that once the Cenvat credit availed by the assessee has been reversed, it can be held that assessee has not taken credit of the duty on inputs utilized in exempted final products. The impugned order-in-original is without any merit and hence the same is set-aside. The appeal is allowed. Issues Involved:- Availing of Cenvat credit on common inputs used for both dutiable and exempted goods.- Non-maintenance of separate accounts for inputs.- Demand for payment under Rule 6 of Cenvat Credit Rules, 2004.- Reversal of Cenvat credit and its sufficiency.Summary:1. Availing of Cenvat credit on common inputs:The appellant, engaged in manufacturing branded and unbranded fire bricks, availed Cenvat credit on inputs such as pet-coke, furnace oil, carbon black, and calcined bauxite, used in both branded and unbranded products. The Revenue contended that the appellant did not maintain separate accounts for these inputs as required under Rule 6 of the Cenvat Credit Rules, 2004, and thus demanded the payment of Central Excise duty at the rate of 8/10% of the value of exempted goods.2. Non-maintenance of separate accounts:The appellant argued that they had provided a Chartered Engineer certificate verifying the consumption of inputs for different types of bricks, which was not considered by the Adjudicating Authority. They claimed to have reversed more than the proportionate credit and paid interest on the same.3. Demand for payment under Rule 6 of Cenvat Credit Rules, 2004:The Tribunal noted that the appellant had already reversed the Cenvat credit before the matter was adjudicated. The department did not verify the Chartered Accountant certificate submitted by the appellant and proceeded to confirm the duty demand based on 8/10% of the value of exempted goods, which was deemed unsustainable by the Tribunal.4. Reversal of Cenvat credit and its sufficiency:The Tribunal referred to several judgments, including the Supreme Court's decision in Chandrapur Magnet Wires (P) Limited vs. Collector of C. Excise, Nagpur, which held that once the Cenvat credit is reversed, it is as if the credit was not taken initially. The Tribunal concluded that the proportionate credit paid by the appellant along with interest was sufficient compliance under Rule 6(3), and thus the demand for 5%/10% of the value of exempted goods and penalties were set aside.Conclusion:The Tribunal set aside the impugned order-in-original, holding that the appellant's reversal of Cenvat credit along with interest was sufficient compliance under Rule 6(3). The appeal was allowed, and the demand and penalties were quashed.