At, Customs Excise Service Tax Appellate Tribunal Regional Bench Allahabad
By, THE HONORABLE JUSTICE: ARCHANA WADHWA
By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
For Petitioner: Stuti Saggi, Advocate And For Respondents: Pawan Kumar Singh, Supdt. AR
1. After hearing both the sides, we note that the appellant was engaged in the manufacture of edible biscuits, and were availing benefit of Cenvat credit of duty paid on various raw materials. The biscuits manufactured by the appellant carried the RSP of less than Rs. 100/- per Kg. as also less than Rs. 50/- per Kg. Prior to 01/03/2007 both types of biscuits were dutiable and as such the appellants were availing the Cenvat credit of duty paid on common raw materials, which were being utilized for payment of duty on both types of biscuits and a common record was being maintained by them.
2. With effect from 01/03/2007 biscuits having RSP less than of Rs. 50/- per Kg. became exempted, though the biscuits of RSP more than of Rs. 50/- continued to remain dutiable. As the appellant had availed Cenvat credit of duty on the raw materials which have gone into manufacture of exempted biscuits, Revenue was of the view that such exempted biscuits were required to pay an amount of 10% of the value of the same, in terms of provisions of Rule 6(3)(iii). Accordingly, demands were raised against them proposing confirmation of amount of Rs. 12,00,476/-.
3. During the adjudication, appellant took a categorical stand that the said biscuits became exempted with effect from 01/03/2007; that they have already reversed proportionate credit of Rs. 2,30,130/- on 31/03/2007. In such a scenario, they contended that it has to be held as if no credit was ever availed by them. However, the Lower Authorities did not agree with the above contention of the appellant and the show cause notice issued to them culminated into an order passed by the Original Adjudicating Authority and upheld by Commissioner (Appeals). Hence the present appeal.
4. After hearing both the sides, we find that there is no dispute about the reversal of Cenvat credit relatable to inputs which stand utilized in the manufacture of exempted final products. It stands held in number of decisions of the higher courts that such reversal of credit would lead to a situation as if no credit was ever availed. The Lower Authorities have observed that the said fact would not make difference inasmuch as the appellant have neither maintained a separate account nor paid 10% of the value of the goods.
5. At this stage, we note that the Hon'ble Supreme Court decision in the case of Chandrapur Magnet Wires Pvt. Ltd. Vs. Collector of Central Excise, Nagpur : 1996 (81) E.L.T. 3 (SC) held that reversal of credit leads to a situation as if no credit was ever availed. The said decision stands followed in number of subsequent judgment of the Tribunal. One such reference can be made to Tribunal decisions in the case of Commissioner of Central Excise & Service Tax, Udaipur Vs. Secure Meters Ltd : 2017 (354) E.L.T. 1
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46 (Tr.-Del.). 6. Inasmuch as the appellant have admittedly reversed the credit, we find no reasons to uphold the impugned orders directing them to pay 10% of the value of the exempted product. Accordingly, the impugned order is set aside and appeal is allowed with consequential relief to the appellant.