Commissioner of C. Ex. vs Anil Products Ltd.

H.N. Devani, J.—In this appeal u/s 35-G of the Central Excise Act, 1944 (the Act) Appellant-revenue has challenged order dated 15-12-2008 made by the Customs, Excise and Service Tax Appellate Tribunal, (the Tribunal) proposing the following questions:

2.1 Whether an Assessee is entitled to follow a system different from the system provided under the Rules and still entitled to a benefit of the Rules de hors the CENVAT Credit Rules, 2004?

2.2 Whether the Tribunal is justified in holding that the system followed by the Assessee-Appellant for availing proportionate reversal of credit is in order and accordingly?

2.3 Whether the Tribunal is justified in relying the case laws particularly the decision in the case of Larger Bench of the Tribunal in Nicholas Piramal (I) Ltd. in Order No. A/823/08/LB [2008 (232) E.L.T. 37 (Tribunal-LB)] wherein it has been held that reversal of credit before clearance of the exempted products would be sufficient?

2.4 Whether the Hon''ble Tribunal is justified in holding that the Assessee took credit proportionate to dutiable products only which would amount to not taking credit, especially when the provisions/contentions of Rule 6(3)(b) of the CENVAT Credit Rules are very clear and mandatory?

Demand came to be confirmed against the Respondent-Assessee in terms of provisions of Rule 6(3)(b) of the CENVAT Credit Rules, 2004 (the Rules) on the ground that the Assessee having availed of input credit in respect of common inputs used in the manufacturing of excisable as well as dutiable goods was required to pay 8% of the price of the exempted goods at the time of clearance of the finished goods. Against the order made by the Commissioner, the Assessee preferred appeal before the Tribunal, which came to be disposed of by remitting the matter to the Commissioner for verifying the correctness of the reversal and directing that any shortfall of reversal would be made good by the Appellant.

Learned Standing Counsel for the Appellant-revenue has vehemently assailed the impugned order of the Tribunal. It was submitted that the Tribunal could not have directed the Commissioner to follow a system different from the system provided under the Rules.

Learned advocate for the Respondent Assessee has invited attention to a decision of this Court in the case of Commissioner of Central Excise, Ahmedabad-II v. Maize Products, 2009 (234) E.L.T. 431 (Guj.) to submit that the controversy involved in the present appeal stands concluded by the said decision in favour of the Assessee.

As can be seen from the impugned order of the Tribunal, the Tribunal has recorded the following findings:

Appellants have taken a categorical stand before the lower authorities that either they have not availed the CENVAT Credit on the inputs and if availed they have reversed proportionately. However inasmuch as the demand was confirmed on the legal ground itself, the above statement of the Appellant remains unverified. We accordingly set aside the impugned order and remand the matter to Commissioner with directions to verify the Appellant''s claim that either the CENVAT Credit has not been availed or if availed, the same stands proportionately reversed by them. We make it clear that it is only for verifying the correctness of the reversal, for which the matter is being sent back and any shortfall in reversal would be made good by the Appellant. We also do not find any reasons to impose penalty upon the Appellant, which is set aside. Appeal is disposed of in above terms.

This Court in the case of Commissioner of Central Excise, Ahmedabad-II m Maize Products (supra) while dismissing revenue''s appeal has held as follows:

In fact, the directions of the Tribunal primarily go to show that the direction was to re-determine the credit taken on common inputs and accept the offer to reverse such entire credit on common inputs insofar as they relate to demand proposed in the nine show cause notices. The Tribunal has also recorded the undertaking given by the Respondent Assessee that if any further credit is to be reversed, the same shall be reversed within four weeks from the date of receipt of the communication from the Department. Hence, in the facts and circumstances of the case, it is apparent that the entire controversy has been decided by the Tribunal by merely remitting the matter back to the Adjudicating Authority to re-determine the credit in accordance with law. If any reversal has been made by the Respondent Assessee, the same is subject to verification and adjustment if ultimately any further amount is found reversible.

On a perusal of the impugned order passed of the Tribunal, it is apparent that the controversy involved in the present case is similar to the controversy involved in decision cited above and as such stands concluded against the revenue.

In the circumstances, for the reasons stated in the said decision, the appeal is dismissed.