Commissioner of Central Excise, Chennai-II vs ICMC Corporation Ltd.

Chitra Venkataraman, J.—The Revenue has preferred this Civil Miscellaneous Appeal as against the Final Order No. 1445 of 2007, dated 4-12-2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai in allowing the assessee''s appeal and the Civil Miscellaneous Appeal is admitted on the following questions of law:

Whether on facts and in the circumstances of the case, the Tribunal is right in holding that the respondent is entitled to Cenvat credit on the inputs used exclusively in the manufacture of goods, which are exempted and which are cleared without payment of duty?

Whether the CESTAT is justified in holding that the assessee is entitled to take Cenvat credit on all inputs including inputs exclusively used in the manufacture of exempted final products contrary to the provisions of Rule 6(1) of Cenvat Credit Rules, 2004?

Whether on facts and in the circumstances of the case, the CESTAT is right in applying the ratio of judgment in the case of Hetero Labs Ltd. v. Commissioner of Central Excise, Hyderabad 2005 (192) E.L.T. 716 (Tri.-Bangalore) where the facts involved are entirely distinct and different from the facts of the instant case and when the said decision has not reached finality?

Following the decision of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd., Nagpur Vs. Collector of Central Excise, Central Excise Collectorate, Nagpur, , wherein the Apex Court held that when the credit attributable to the inputs in exempted product is reversed by the assessee, the demand of 8% -10% on the sale price was not justified under Rule 6 of the Cenvat Credit Rules, 2004, the Customs, Excise and Service Tax Appellate Tribunal allowed the appeal filed by the assessee holding that when the credit was reversed by the assessee, it was as if they had not taken any credit at all.

Aggrieved by this, the Revenue is on appeal before this Court.

We find from a reading of the amendment made to Rule 6 under Section 73 of the Finance Act, 2010 that the procedure of the Cenvat Credit Rules under Rule 6 was brought in with retrospective effect from September, 2004 by insertion under Rule 6(6), which reads as under:

As per Section 73 sub-section (2) of the Finance Act, 2010 the assessee has to make an application to the Commissioner of Central Excise along with documentary evidence and a Certificate from the Chartered Accountant or a Cost Accountant, certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of exempted goods within a period of six months from the date on which the Finance Bill, 2010 received the assent of the President.

Considering the fact that the assessee had reversed the credit even prior to the amendment and the order of the Tribunal is in fact no different from what is contemplated under the Finance Act, 2010, we do not find anything survives further for this Court to consider the merits of the case pleaded by the Revenue. Accordingly, the Civil Miscellaneous Appeal fails and the same is dismissed. No costs.