Obligation of Reversing CENVAT Credit from Excise Duty Not Applicable if Goods are Supplied against International Competitive Bidding u/r 6(6) of CENVAT Credit Rules: CESTAT

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the obligation of reversing CENVAT credit from excise duty is not applicable if the goods are supplied against the International Competitive Bidding under rule 6(6) of the CENVAT Credit Rules,2004. 

Emerson Process Management Chennai P.Ltd, the appellant assessee was engaged in the manufacture of Industrial valves, Gaskets, etc., and are registered with the Central Excise Department they are availing CENVAT credit on inputs, capital goods, and input services and utilizing the credit for payment of central excise duty. 

The assessee appealed against the order passed by the Commissioner for imposing a penalty along with interest on the ground of clearing goods without payment of duty. 

S. Adithya, the counsel for the assessee contended that the excise duty was not payable on the intermediate goods as it was covered under rule 6 (6) of CENVAT Credit Rules as the final product was supplied against the international competitive bidding. 

Further submitted that the goods had been supplied against the international competitive bidding and hence there was no obligation for the assessee under Rule 6(6) of the CENVAT Credit Rules. 

Harendra Singh Pal, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the CENVAT credit was not eligible on the duty which was paid/recovered from the manufacturer on account of short levy due to wilful misstatement, suppression of facts with intention to evade payment of duty. 

The Bench observed that the Excise duty paid if any would be eligible for CENAVT credit and the bar under Rule 9 (1) (b) of the CENVAT Credit Rules did not apply to the present appeal. 

The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the demand of duty and allowed the appeal filed by the assessee. 

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