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of <h1>Calcutta High Court Rules on CENVAT Credit: Show Cause Notice Demands Unsupported, Assessee's Appeal Allowed, Penalties Set Aside.</h1> A recent legal dispute adjudicated by the Calcutta High Court examined issues related to the Central Excise Duty and CENVAT Credit Rules. The core dispute involved the availing of CENVAT credit without separate records for manufacturing dutiable and exempt goods, raising questions about procedural credit claims. The Department's appeal was based on a late application for credit reversal and demand quantification. The court ruled that the Show Cause Notice demanding 5% or 10% of exempted product value was unsupported by law, allowing the assessee's appeal and setting aside penalties. The case relied on a Telangana High Court precedent, emphasizing that authorities cannot impose credit reversal decisions on assessees who do not maintain separate accounts. The ruling clarified that Rule 6(3) merely provides options for service providers, and authorities can only disallow wrongly availed credit. This case clarifies the legal framework for CENVAT credit claims and reversals.
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