The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) set aside demand of proportionate cenvat credit as assessee reversed the same along with interest.There is no need to demand of proportionate cenvat credit when the assessee itself reversed the same as per the amendment on Section 73 of the Finance Act, 2010,
The appellant M/s. Neelachal Ispat Nigam Limited challenged the impugned order confirming the amount on account of non-maintenance of separate records of input, input service received and availed by the appellant in manufacturing of dutiable as well as exempted products.
The appellant is engaged in the manufacturing activity of iron and steel and during the course of manufacturing activity, the appellant got themselves registered with the central excise department. After registration, the appellant is availing cenvat credit on input and input services and not maintaining separate account for input and input service used in manufacture of their final product.
The appellant is manufacturing dutiable as well as exempted products and not maintaining separate account for input or input servicers used in manufacturing of these products. The appellant on their own volition is reversing the cenvat credit attributable to final exempted goods of input and input service used for manufacturing of the same.
During the course of investigation, it was found that as the appellant is not maintaining separate account of their input, input service to be used in manufacturing of final, dutiable as well as exempted products, therefore, in terms of Rule 6(3) of the Cenvat Credit Rules, 2004, the proceedings were initiated against the appellant on account of that the appellant is not maintaining separate account of input/input services used in manufacturing of dutiable as well as exempted products, therefore, in terms of Rule 6(3) of the Cenvat Credit Rules, 2004 the appellant is required to pay an amount equal to 10% of the value of the exempted goods sold during the period 2005-06 to 2007-08.
The appellant submitted that in 2010 vide Section 73 of the Finance Act, 2010, an amendment was brought to give relief to the assesses, wherein it is incorporated that if the assessee is not maintaining separate account of input or input services used for manufacture of final dutiable as well as exempted product, then the assessee can reverse the cenvat credit for input or input services used in manufacture of final exempted products and the same is required to be done within 6(six) months from the date 18.05.2010 along with a certificate issued by the Chartered Accountant and payment of 24% of the interest for the defaulting period.
As the amendment was given retrospective effect, the appellant reversed the cenvat credit and paid the interest at 24% and filed a certificate issued the Chartered Accountant before the adjudicating authority and the adjudicating authority without considering the same passed the impugned order.
The appellant in terms of section 73 of the Finance Act, 2010 has reversed proportionate cenvat credit along with interest @24% of input/input services used in the manufacture of final exempted products and also filed a certificate issued by the Chartered Accountant to that effect.
A two member bench comprising Shri Ashok Jindal, Member(Judicial) and Shri k. Anpazhakan, Member(Technical) held that “proportionate reversal of cenvat credit will suffice to meet the end of justice in the proceeding before us. Therefore, no demand is sustainable against the appellant. Accordingly, we set aside the impugned order and allow the appeal with consequential relief, if any.”
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