The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that no excise duty demand was sustainable under rule 6(3) of the CENVAT Credit Rules (CCR),2004 when the CENVAT credit reversed on common input service attributed to exempted steam clearance.
Shreno Limited, the respondent assessee reversed the proportionate credit attributed to the exempted steam cleared from the factory of the assessee and the revenue appealed against the issue that the assessee was liable to pay 10%/8%/6% on the value of exempted Steam cleared from the factory under Rule 6(3) of CENVAT Credit Rules.
Rajesh Nathan, the counsel for the department contended that in the case of Thane Vs. Nicholas Piramal (India) Ltd, the court held that in case an assessee had taken the credit on the common input service there was no option except to pay 10%/8%/6%, in terms of Rule 6(3) of CENVAT Credit Rules.
Saurabh Dixit, the counsel for the assessee contended that the issue was no longer res integra, and in the case of Thane Vs. Nicholas Piramal (India) Ltd, the court held that once the proportionate CENVAT credit was reversed no demand under Rule 6(3) will be sustainable.
The Bench observed that there was no dispute on the fact that the assessee had reversed the CENVAT Credit on the common input service attributed to the exempted steam cleared by the respondent from their factory and the demand raised by the department was not sustainable and rightly dropped by the adjudicating authority.
The two-member bench comprising Ramesh Nair (Judicial) and Raju (Technical) upheld the dropping of demand raised by the revenue while dismissing the appeal filed by the revenue.
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