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

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 allowed, and the demand for payment under Rule 6 of the Cenvat Credit Rules, 2004, along with penalties, was dismissed.

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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.

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