TaxTMI 
TaxTMI 
2025 (4) TMI 1185
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.... 22 of the First Schedule to the Central Excise Tariff Act, 1985. The aerated drinks manufactured by the appellant are chargeable to excise duty, whereas 'Slice' is exempted from payment of excise duty. During the relevant period, i.e. 2006-07 to 2007-08, the appellant availed Cenvat Credit of service tax paid on services used in relation to manufacture of dutiable goods. The appellant availed the Cenvat Credit of service tax paid on input services of inward freight on transportation of inputs to the factory. The said inputs were used in manufacture of dutiable as well as exempted final products. Subsequently, the appellant realized its mistake and reversed the amount of credit amounting Rs.14,683.70 vide Entry 192 dated 18.08.2008 availed in relation to manufacture of exempt products. During the audit, vide Audit Report dated 16.01.2009, an objection was raised that the Cenvat Credit was availed in respect of input services used in manufacture of dutiable as well as exempted products without maintenance of separate accounts. It was alleged by the department that the appellant is liable to pay an amount equal to 10% of the total price of exempted goods as per Rule 6(3) of t....
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....lem - 2010 (262) E.L.T. 786 (Tri. - Chennai) [Affirmed by Madras High Court in 2013 (295) E.L.T. 671 (Mad.)] 4.4 The learned Counsel further submits that vide Section 73 of the Finance Act, 2010, Rule 6 of the Cenvat Credit Rules was amended retrospectively to provide for reversal of credit on proportionate basis with interest. Accordingly, the appellant also paid interest and therefore the appellant is entitled to benefit of retrospective amendment in Rule 6 of the Cenvat Credit Rules made by the Finance Act, 2010. In this regard, he relies on the following cases: • The Principal Commissioner of CGST and Central Excise, Mumbai East Commissionerate Vs Larsen & Toubro Limited (HED), Powai, Mumbai - 2023 (8) TMI 1140 - Bombay High Court • The Commissioner of Central Excise, Mumbai Vs M/s IVP Limited - 2017 (349) E.L.T. 18 (Bom.) • Welspun Corp. Ltd. Vs Commissioner of Central Excise, Kutch - 2019 (368) E.L.T. 179 (Tri. Ahmd.) [admitted in High Court in Commissioner Vs Welspun Corp. Ltd. - 2019 (368) E.L.T. A53 (Guj.)] 4.5 The learned Counsel further submits that there is no dispute with respect to the reversal of the credit availed by the ....
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.... even before the objection was raised by the department in the audit proceedings. The same was also pointed out at the time of audit and was never disputed by the department. He also submits that there was no suppression and wilful misstatement on part of the appellant and the issue involves interpretation of the legal provisions. Therefore, extended period of limitation cannot be invoked. In this regard, he relies on the following decisions: • Collector of Central Excise Vs H.M.M. Ltd. - 1995 (76) ELT 497 (SC) • Raj Bahadur Narain Singh Sugar Mills Ltd. Vs Union of India - 1996 (88) ELT 24 (SC) • Air India Ltd. Vs Commissioner of Service Tax, New Delhi - Final Order No. 50245/2024 dated 19.01.2024 - CESTAT New Delhi [affirmed by the Delhi High Court vide order dated 22.10.2024] • The Commissioner of Central Excise and Customs and another Vs M/s Reliance Industries Ltd. And Commissioner of Central Excise and Service Tax Vs M/s Reliance Industries Ltd. - 2023-TIOL-94-SC-CX 4.8 As regards the interest and penalty, the learned Counsel submits when the demand itself is not sustainable, interest and penalty cannot be imposed. 5.1....
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....rsed the credit alongwith interest and therefore, the appellant is entitled to the benefit of the retrospective amendment in Rule 6 ibid as held in the cases relied upon by the appellant (cited above in para 4.4). 10. We also find that it is a settled law that reversal of credit amounts to non-availment of credit as held in various cases relied upon by the appellant (cited above in para 4.5). 11. We find that the Tribunal has discussed the identical issue in the case of M/s Star Agriwarehousing & Collateral Management Ltd (supra). Relevant findings are reproduced herein below: "9. We are also of the view that once the proportionate reversal of the Cenvat credit has taken place, that tentamount to not availing of the input services credit of the common inputs which are going into the exempted services. While holding this view we take shelter of the decision of the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. versus Collector of Central Excise, Nagpur - 1996 (81) E.L.T. 3 (S.C.). 10. We also take note of this Tribunal's decision on the same issue in case of M/s The Oberoi Rajvilas versus Commissioner of Central Excise, Jaipur reported ....