2023 (6) TMI 455

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....rief facts of the case are that the appellant are engaged in manufacture of excisable goods falling under chapter No. 28,29,31& 38 of the Central Excise Tariff Act, 1985. They are also availing Cenvat Credit under Cenvat Credit Rules 2004 on central excise duty paid on Inputs, Capital Goods and Input Services. Appellant is manufacturing Siapton 10L which was exempted. The said goods were cleared without payment duty but neither separate account were maintained for duty paid inputs and input services used in the manufacture of dutiable and exempted goods nor 10% amount of value of clearance of such goods was paid. Accordingly, show cause notices dated 29-02-20209 and dated 13.05.2010 were issued to the appellant demanding central excise duty....

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....mount of Cenvat credit along with interest attributable to common input services for the period April 2004 to June 2009, dropped demand only for the period April 2004 to March 2008 being covered under Rule 6 (7) of the Cenvat Credit Rules and confirmed the demand and recovery amounting to Rs. 1,26,19,534 along with interest for the period April 2008 to June 2009, which is bad in law. Appellant having reversed entire amount of Cenvat Credit availed on common input services related to SIAPTON, the demand is not sustainable. He placed reliance on the following judgments:- (i) Welspun Corporation Ltd. vs. CCE - 2019 (368) ELT 179(Tri.) (ii) Star Agriwarehousing & Collateral Management Ltd. vs. CCE - 2021 (44) GSTL 271 ((Tri.) ....

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.... (both days inclusive) is pending on the date on which the Finance Bill, 2010 receives the assent of the President, then notwithstanding anything contained in sub-rules (1) and (2) and clauses (a) and (b) of sub-rule (3), a manufacturer availing CENVAT credit in respect of any inputs of chargeable to duty and also other final products which are exempted goods may pay an amount equivalent to CENVAT credit attributable to the inputs or input services used in or in relation to the manufacture of exempted goods before or after the clearance of such goods." The procedure for claiming the benefit under sub-rule (7) of Rule 6 of the Cenvat Credit Rules, 2004 was also prescribed under the Finance Act, 2010 vide Section 73(2) (vide infra). ....

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....it proportionate to the credit on input service used for exempted goods along with interest, therefore, first the credit though availed at the time of receipt of input service but after reversal thereof along with interest the position is as if credit was not availed. We are also of the view that Rule 6 of the Cenvat Credit Rules is not enacted to extract illegal amount from the assessee. The main objective of the Rule 6 is to ensure that the assessee should not avail the Cenvat Credit in respect of input or input services which are used in or in relation to the manufacture of the exempted goods or for exempted services. If this is the objective then at the most amount which is to be recovered shall not be in any case more than Cenvat Credi....