Appellant granted recredit under CENVAT Credit Rules 2004. Tribunal allows appeal, sets aside impugned order.

The Tribunal held that the appellant correctly applied the formula under Rule 6 (3 A) of CENVAT Credit Rules 2004. The appellant was deemed eligible for recredit of the excess amount reversed on common input services used in electricity production. The Tribunal did not find it necessary to address the appellant's claim for interest on the reversed amount, ultimately setting aside the impugned order and allowing the appeal with any consequential reliefs.

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Issues involved:
The primary issue in this case is whether the appellant correctly applied the formula under Rule 6 (3 A) of CENVAT Credit Rules 2004 for reversing the proportionate credit availed on common input services used in the production of exempted product (electricity). Another issue is whether the appellant is eligible for recredit of the excess amount reversed and interest on said amount.

Issue 1: Correct application of formula under Rule 6 (3 A) of CENVAT Credit Rules 2004:
The appellant, engaged in manufacturing clinker and cement, produced electricity for captive consumption and sold part to Tamil Nadu Electricity Board. An audit objection was raised regarding the reversal of credit on common inputs used for electricity production sold to the Board. The department contended that the appellant should have considered total credit instead of total common input credit while applying the formula. The appellant reversed credit under protest and later sought recredit, arguing that the reversal was in excess. The original authority and Commissioner (Appeals) upheld the denial of recredit, leading to the appeal.

Issue 2: Eligibility for recredit and interest:
The appellant argued that they correctly applied the formula as per law and should be allowed recredit of the excess reversed amount. They also claimed eligibility for interest on the reversed amount made under protest. The appellant cited precedents such as the decision in the case of M/s. Toshiba JSW Power System Pvt. Ltd. and M/s. Aavantika Gas Ltd. to support their position.

Judgment:
The Tribunal analyzed the interpretation of the term "total cenvat credit" in the formula under Rule 6 (3 A) in previous cases. Referring to the decision in the case of CCE Vs Reliance Industries Ltd., the Tribunal held that total cenvat credit for the formula is only on common input services and does not include credit on inputs exclusively used for dutiable goods. The Tribunal found that the appellant's original reversal of credit was correct, and the subsequent reversal under audit direction was an excess. Therefore, the appellant was deemed eligible for recredit of the excess amount.

The Tribunal also addressed the appellant's claim for interest on the reversed amount. While acknowledging the appellant's argument and citing relevant legal provisions, the Tribunal found that the issue of interest was not necessary to consider in this appeal. Ultimately, the impugned order was set aside, allowing the appeal with any consequential reliefs.

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