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of <h1>Tribunal grants appeal, citing legal precedent on credit reversal for exempted products.</h1> <h3>SIRPUR PAPER MILLS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD</h3> The Tribunal allowed the appeal, finding the demand unjust given the low credit amount and reversed credit. The decision was based on legal precedents, ... Cenvat/Modvat - Reversal of Issues Involved: Appeal against Order-in-Appeal regarding demand under Rule 57CC/Rule 6 of Cenvat Credit Rules, 2001 and imposition of penalty under various rules.Summary:The appellants manufactured paper and paperboards under a notification allowing first clearance at nil rate of duty. Show cause notices were issued proposing a demand of 8% on goods cleared at nil rate due to common inputs. The adjudicating authority confirmed a demand under Rule 57CC/Rule 6 and imposed penalties. The appellants challenged the order, arguing that the demand is not duty, no pre-deposit is required, and there was no provision for collection before a certain date. They also contended that credit attributable to exempted goods had been reversed. The Tribunal noted the common inputs usage, lack of separate accounts, and the proportion of goods cleared at nil rate. Considering the credit reversal and legal precedents, the Tribunal allowed the appeal, finding the demand unjust given the low credit amount and reversed credit. The decision was based on the Chandrapur Magnet Wires Pvt. Ltd. case, holding that reversal of credit on exempted products amounts to non-availment of credit, thus justifying relief for the appellants.The Tribunal, after careful review, found that the appellants used common inputs for both dutiable and exempted goods without separate accounts, falling under Rule 57CC/Rule 6. Despite a significant demand, the credit attributable to exempted goods was minimal, and the appellants had already reversed this credit. Citing legal precedent and the principle of non-availment of credit on exempted inputs, the Tribunal concluded that demanding 8% of the sale amount was unjust. Therefore, the appeal was allowed with consequential relief.
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