Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench approves eligibility for refund of amount reversed in CENVAT credit account under rule 6(3A) of CENVAT Credit Rules, 2004 (CCR) between April 2010 and March 2011 thereby granting relief to Reliance Industries Limited.
The appeal was filed against the order of the Commissioner of Central Excise and Service Tax (Appeals), holding that the appellant, M/s Reliance Industries Ltd, was ineligible for refund of amounts that had, inadvertently, been reversed in CENVAT credit account under rule 6(3A) of CENVAT Credit Rules, 2004 between April 2010 and March 2011.
The credit to the extent of Rs 3,18,04,141/-, comprising Rs 74,27,104 that had been reversed/paid on ‘inputs’ attributable to ‘liquefied petroleum gas (LPG)’ cleared by them and Rs 2,43,77,037 that, in accordance with the formula prescribed in rule 6(3A)(c)(iii) of CENVAT Credit Rules, 2004 was excluded from computation of eligible balance, has, according to the Counsel for appellant, been improperly denied to them as is evident from the decision of the High Court of Gujarat in Principal Commissioner of Central GST and Central Excise v. Reliance Industries Ltd.
The appellant, Reliance Industries Limited is a manufacturer of excisable goods and had availed credit under CENVAT Credit Rules, 2004 on eligible ‘inputs’ used in the manufacture of excisable goods but, under the impression that ‘liquefied petroleum gas (LPG)’, exempted by notification no. 4/2006-Central Excise Act, 1944 dated 1st March 2006 when cleared for use under the ‘public distribution system (PDS)’ were ‘exempted goods’ within the meaning of rule 2(d) of CENVAT Credit Rules, 2004, reversed such proportion and also excluded it for the computation prescribed in rule 6(3A) of CENVAT Credit Rules, 2004. According to the appellant, the goods so cleared were not ‘exempted goods.’
The Bench consisting of C J Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “the principle stands established that rule 6 of CENVAT Credit Rules, 2004 is inoperable ab initio in such clearances. Accordingly, the appeal is allowed and the impugned order is set aside.”
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