Court rules honey not exempted under Cenvat Credit Rules, 2004, allowing appellant's appeal.

The court held that the proceedings against the appellant were not sustainable under Rule 6 of the Cenvat Credit Rules, 2004, as honey was not considered an exempted good. The judgment set aside the orders and allowed the appeals, providing consequential relief.

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Issues involved:
The judgment addresses the issue of cenvat credit availed by the appellant for credit distributed by the Input Service Distributor (ISD) related to advertisement and other services, and the demand raised by the revenue on the value of honey treated as exempted goods. The appellant contests the demand based on the application of Rule 6 of the Cenvat Credit Rules, 2004.

Issue 1: Cenvat Credit Availed by Appellant for Credit Distributed by ISD:

The appellant did not avail credit of common input services provisionally on a monthly basis but finally availed such credit only in the next financial year. The ISD distributed credit of advertisement services pertaining to honey only to the extent it pertained to the taxable Glucose. For the period post-2014, the ISD distributed the entire credit among all the units. The appellant applied the provisions of Rule 6(3)(ii) of the CCR on cenvat credit distributed by the ISD in the ratio of taxable turnover to total turnover. Despite following the methodology of availing credit pertaining only to dutiable turnover, the revenue issued show cause notices proposing to recover 6% of the value of honey treated as an exempted good. The appellant contests the demand, arguing that honey is non-excisable, and therefore, Rule 6 is not applicable.

Issue 2: Applicability of Rule 6 of the Cenvat Credit Rules, 2004:

The appellant argues that honey is non-excisable as no rate of duty is specified in the tariff, and thus, it does not qualify as exempted goods under Rule 6. Referring to legal precedents and CBEC Circulars, the appellant contends that leaving a column blank in the tariff cannot be equated with NIL rate, and therefore, honey should not be considered exempted goods. The appellant also asserts that they have reversed proportionate cenvat credit, as per Rule 6(3)(a), negating the need to pay 6% of the value of honey cleared by them. The judgment concurs with the appellant's argument, holding that the proceedings against the appellant are not sustainable under Rule 6 of the Cenvat Credit Rules, 2004.

Conclusion:

The judgment sets aside the impugned orders and allows the appeals with consequential relief, if any, based on the observation that honey is not an exempted good, and therefore, Rule 6 of the Cenvat Credit Rules, 2004 is not applicable in this case.

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