2024 (10) TMI 501

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....cise Tariff Act, 1985 as well as in trading of various components and spare parts of DG sets. 1.1. Under the Central Excise regime, the goods manufactured by the Appellants were leviable to Central Excise duty. Accordingly, the Appellants were clearing their finished goods on payment of Central Excise duty and availed CENVAT credit on inputs, capital goods and input services in terms of Rule 3 of the CENVAT Credit Rules, 2004 (hereinafter referred to as the "Rules"). 1.2. The spare parts and various components of DG sets traded by the Appellant were exempted from payment of duty in terms of Notification No. 03/2011-CE [NT] dated 01.03.2011 [w.e.f. 01.04.2011). The Department officials observed that though the assessee had used the inp....

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...., they are liable to pay an amount equal to 6% on the value of exempted goods. 1.6. Pursuant to the aforesaid investigation dated 18.03.2015 and 19.03.2015, the Appellant reversed Cenvat credit for Rs. 1,65,61,035.91 @ 6% of value of traded goods dated 19.03.2015. Moreover, an audit of the Appellant's records was conducted by the Excise officers of Valsad Commissionerate resulting into Audit Report No. 374/ VASAD/ VALSAD. 2014-2015(Gr.-32) dated 27.04.2015 wherein a similar observation as regards non-compliance with Rule 6 was made and accordingly an audit para seeking necessary action on the part of Appellants was raised. 1.7. As per the instructions received form the Audit Officers, the Appellant reversed the entire credit of Rs....

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....herein, the demand of Rs. 1, 68, 38,813/- was confirmed under Rule 14 of the Credit Rules read with Section 11A(4) of the Excise Act, along with interest and penalty under Sections 11AA and 11AC of the Act for the period March 2013- December 2014, with following observations : A. Cenvat credit shall not be allowed on such input services used in clearance of exempted services; B. In cases where the inputs/input services are used in dutiable as well as exempted goods, the provisions are made that separate account should be maintained for receipt, consumption and inventory of inputs/input services used in relation to manufacture of exempted goods and the credit shall be allowed only on inputs/input services which are used in ....

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.... in the appeal memorandum. 2. Shri Amber Kumrawat learned Counsel appearing on behalf of the appellant submits that the appellant have admittedly paid the proportionate CENVAT Credit attributed to the trading goods along with interest from the date of availment of credit till the reversal thereof. He submits that such proportionate credit was reversed in terms of Rule 6 (3) (2) for the period of 2014-2015 and intimated to the Central Excise Department about such reversal of credit. Therefore, the demand equal to 6% on the traded goods (exempted service) is not sustainable as held in following judgments : - Schwing Stetter India Pvt. Ltd Vs CCE 2024 (4) TMI 559-CESTAT Emami Limited Versus C.C.E & S.T. -Valsad 2023 (8)....