2016 (12) TMI 841

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.... the manufacture of sponge iron. The electricity required for use within the factory premises is generated using a power plant installed in their factory premises. The appellant availed cenvat credit of certain common inputs as well as input services which were used in the manufacture of dutiable final products as well as in the production of electricity, but did not maintain separate accounts for the inputs as well as input services used for this. Since no duty has been indicated against electricity in Central Excise tariff item 27 16 0000, it is to be considered as exempted goods. Accordingly, the department took the view that in terms of Rule 6(3) of the Cenvat Credit Rules, the appellant is required to reverse an amount equal to 10% (up....

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....services attributable to the electricity used captively, the cenvat credit is fully justified and there is no justification for reversal. However, in respect of the portion of cenvat credit attributable to the inputs/ input services used in the generation of electricity sold outside, it is to be held that such inputs/ input services have not been used towards manufacture of dutiable final products. Rule 6(3) of the Cenvat Credit Rules requires reversal of an amount to the extent of 10%/ 5% of the value of exempted products. Demands stands made and confirmed to the extent of Rs. 1,47,81,450/- by taking the above view. The submission of the appellant is that the appellant has already reversed the entire cenvat credit alongwith interest on pro....

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.... introduced the facility of proportionate reversal w.e.f. 01.04.2008 to mitigate the difficulties faced by manufacturers to maintain separate accounts for inputs/ input services as well as when the same are commonly used for dutiable as well as exempted products/ services. Though detailed procedure starting with an option to be exercised by manufacturer has been prescribed, in the present case, the appellant has not followed the same. However, it is on record that they have already reversed an amount claimed to be proportionate. It is also pertinent to record that this has been done by the appellant even before the issue of the show cause notice in this case. We are of the considered view that the failure of the appellant to follow the proc....