Tribunal overturns penalty due to record-keeping failure, remands case for reconsideration under amended Rule 6.Reversal of CENVAT credit - Rule 6(3) (b) of CCR - non-maintenance of separate record regarding the inputs used in manufacture of exempted goods - Held that:- Rule 6 of CCR is amended retrospectively by the FA, 2010 and an option has been given to the manufacturer to reverse the credit in respect of the inputs used in the manufacture of exempted goods and the procedure is also prescribed in the amending section - The manufacturer who opts to pay the amount in accordance with the provisions, has ... ... ... Issues:
1. Appeal against demand and penalty imposition.
2. Availing credit for common inputs used in manufacturing exempted and duty paid goods.
3. Confirmation of demand under Rule 6(3)(b) of Cenvat Credit Rules.
4. Retrospective amendment of Rule 6 and options provided to manufacturers.
5. Requirement for manufacturers opting to reverse credit for exempted goods.
6. Remand of the matter for reconsideration by the adjudicating authority.

Analysis:
The appeal was filed against an order confirming a demand of Rs. 1,85,488/- and imposing an equal amount as penalty. The issue revolved around the appellant availing credit for common inputs used in manufacturing both exempted and duty paid goods. The demand was upheld under Rule 6(3)(b) of the Cenvat Credit Rules, as the appellants failed to maintain separate records for inputs used in exempted goods. However, a significant development was noted regarding the retrospective amendment of Rule 6 by the Finance Act, 2010. The amendment provided manufacturers with the option to reverse credit for inputs used in exempted goods, with a prescribed procedure for application submission and verification by the Commissioner of Central Excise.

The Tribunal highlighted the importance of the retrospective amendment and the new provisions introduced for manufacturers opting to reverse credit for exempted goods. It was emphasized that manufacturers choosing this option must file an application with the Commissioner of Central Excise, supported by documentary evidence and a certificate from a Chartered Accountant or Cost Accountant. The Commissioner would then verify the input credit amount paid and issue an appropriate order based on the application. In light of these changes, the Tribunal concluded that the matter required reconsideration by the adjudicating authority.

Consequently, the impugned order was set aside, and the case was remanded to the adjudicating authority for a fresh decision after providing the appellant with an opportunity for a hearing. The appeal was disposed of through remand, ensuring that the adjudicating authority would reassess the case in accordance with the amended Rule 6 and the options available to manufacturers regarding credit reversal for inputs used in exempted goods. Reversal of CENVAT credit - Rule 6(3) (b) of CCR - non-maintenance of separate record regarding the inputs used in manufacture of exempted goods - Held that:- Rule 6 of CCR is amended retrospectively by the FA, 2010 and an option has been given to the manufacturer to reverse the credit in respect of the inputs used in the manufacture of exempted goods and the procedure is also prescribed in the amending section - The manufacturer who opts to pay the amount in accordance with the provisions, has to file an application to the Commissioner of Central Excise with the documentary evidence coupled with a certificate of a Chartered Accountant or a Cost Accountant, in case the amount of credit attributable to the inputs used in or in relation to the manufacture of final products which are exempted from whole of the duty of excise or chargeable to rate of duty. The Commissioner of Central Excise on receipt of such application would verify the input credit amount paid and pass an appropriate order - appeal allowed by way of remand. DABUR PHARMA LTD. Versus COMMISSIONER OF C. EX., KOLKOTA-I
Central Excise
2010 (5) TMI 734 - CESTAT KOLKATA - 2010 (262) E.L.T. 275 (Tri. - Kolkata)
CESTAT KOLKATA - AT
Dated:- 28-5-2010
E/598/2009 - A-362/KOL/2010
Central Excise
Shri S.S. Kang, J. Shri K.K. Banerjee, Advocate for the Appellant. Shri B.B. Agarwal, Jt. CDR, for the Respondent. ORDER Heard both sides. 2. Appellant filed this appeal against the impugned order whereby demand of Rs. 1,85,488/- was confirmed and penalty of the equal amount was imposed. The appellants are availing credit in respect of the common inputes which are used in the manufacture of exempted goods as well as duty paid goods. The demand is confirmed as per Rule 6(3) (b) of Cenvat Credit Rules. The appellants are liable to pay 10% of the price on exempted goods as the appellants are not maintaining separate record regarding the inputs used in manufacture of exempted goods. 3. I find that now the Rule 6 of Cenvat Credit Rules is amended retrospectively by the Finance Act, 2010 and an option has been given to the manufacturer to reverse the credit in respect of the inputs used in the manufacture of exempted goods and the procedure is also prescribed in the amending section. The manufacturer who opts to pay the amount in accordance with the provisions, has to file an application to the Commissioner of Central Excise with the documentary evidence coupled with a certificate of a Chartered Accountant or a Cost Accountant, in case the amount of credit attributable to the inputs used in or in relation to the manufacture of final products which are exempted from whole of the duty of excise or chargeable to rate of duty. The Commissioner of Central Excise on receipt of such application would verify the input credit amount paid and pass an appropriate order. 4. In view of the above retrospective amendment, the matter requires reconsideration by the adjudicating authority. The impugned order is set aside and the matter is remanded to the adjudicating authority to decide afresh after affording opportunity of hearing to the appellant. The appeal is disposed off by way of Remand. (Dictated and pronounced in the open court)
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