The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench quashed the demand of 10% of value of exempted goods on the reversal of entire cenvat credit attributed to input and input services used in exempted goods.
A show cause notice was issued to the Appellant inter-alia demanding an amount of Rs. 1,40,23,501 being 10% of the clearance value of exempted product under Rule 6 (3) of CCR and Rs. 40,66,510/- pertaining to credit availed on capital goods allegedly used exclusively in manufacture of exempted product and lying in balance as on 07.12.2008 along with interest and penalties
The counsel for the appellant submitted that even though the exempted goods have been exported partly and to that extent the cenvat credit cannot be denied. It was argued that as regard the main allegation in the show cause notice that since the appellant had availed the cenvat credit on the common input service attributed to the exempted goods, the same will not sustain for the reason that as per the proceeding of earlier show cause notice dated 29.08.2013, the case stand concluded and according to which whatever cenvat credit attributable to the exempted goods stand paid along with interest and also paid 25% penalty.
It was also contended that as per the admitted position in the present case, there is no case of availment of cenvat credit on the common input services attributable to the exempted goods, therefore, the entire basis of this show cause notice dated 19.12.2013 does not exists and without any foundation for this reason also even the demand on the basis of the allegation made in the show cause notice also does not sustain.
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “We find that the demand of 10% of value of exempted goods wherein the common cenvatable input services were used in the exempted as well as dutiable goods. In the present case, earlier a show cause notice dated 29.08.2013 was issued wherein the cenvat credit of Rs. 35,82,694 attributed to input and input services used in the exempted product was proposed.”
“In the said remand vide Order-In-Original No. DMN-EXCUS-000-COM-032-18-19 dated 29.01.2019 confirmed the demand of Rs. 9,48,034/- and dropped the balance demand amounting to Rs. 26,34,659. Since the appellant had already reversed the amount final confirmed of Rs. 9,48,034/-, accordingly, the entire cenvat credit attributed to the input and input services used in exempted goods was reversed and the same attained finality. Therefore, the entire basis for demanding 10% of the value of exempted goods under Rule 6 (3) (b) does not exist. Accordingly, the demand of 10% of the value of exempted goods which was proposed in the show cause notice is also not sustainable” the Tribunal concluded.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
