The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) remanded the Payment of Cenvat credit on inputs used in exempted goods under Rule 6(3)A of Cenvat Credit Rules,2004 as the matter was pending in Supreme Court decision.
The issue is that whether Bodal Chemicals Ltd, the appellant is liable to reverse the proportionate Cenvat credit of inputs used and attributed to Sulphuric Acid cleared under exemption Notification No. 4/2006-CE dated 01.03.2006 (Sr. No. 32) on nil rate of duty. The department was of view that since the Sulphuric Acid has been cleared under exemption, in terms of rule 6(3)A, the appellant is liable to pay equal amount of Cenvat credit on the inputs used in such exempted goods.
Shri N. K. Tiwari, Consultant appearing on behalf of the appellant submitted that the clearance of goods i.e. Sulphuric Acid to various fertilizers unit was made by following the conditions No. 2 of the said notification whereby, the appellant have cleared the goods by following the procedure laid down in Central Excise(Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods)Rules, 2001.
As per the condition the goods per se is not exempted goods which is cleared under bond under the said procedure. Therefore, the same is not exempted goods and consequently the demand of Cenvat credit is not sustainable.
Shri P.Tripathi, Superintendent(AR) appearing on behalf of the revenue reiterated the finding of the impugned order. He submitted that as per Rule 6(3), there is no exception provided that exemption based on certain condition is excluded from the provision of the Rule 6(3).
The appellant he submitted that all the judgments are related to either erstwhile Rule 57 CC of Central Excise Rules, 1944 or for the period when the definition of exempted goods was not brought under statue in rule 2(D)(d) of Cenvat Credit Rules, 2004, therefore, the judgments are not directly applicable.
As per the definition of exempted goods in Rule 2(D)(d) of Cenvat Credit Rules, 2004, the exempted goods is not only the exempted by notification but also the goods bear a ‘nil’ rate of duty also.
It was viewed that in one of the judgments in the case of Dharamsi Morarji chemical Co. Ltd. the revenue’s appeal is pending before the Supreme Court.
The two member bench comprising Mr. Ramesh Nair, Member (Judicial) and Mr. C L Mahar, Member (Technical) held that “ it will be in the interest of justice that this matter maybe finally decided only after the Apex Court delivers its judgment in Dharamsi Morarji chemical Co. Ltd. (Supra) case.”
The CESTAT set aside the impugned order and remanded the matter to the Adjudicating Authority for passing a fresh order after the decision of the Supreme Court in the case Dharamsi Morarji chemical Co. Ltd.
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