Commissioner of CGST & Central Excise Vs Metal Alloys Corporation (CESTAT Ahmedabad)
The appeal before CESTAT Ahmedabad was filed by the Revenue against the order of the Commissioner (Appeals), which had upheld the adjudicating authority’s decision in favour of the respondent and rejected the department’s appeal. The respondent is engaged in the manufacture of brass under Chapter 74 of the Central Excise Tariff Act, 1985 and also undertakes job work for goods supplied to an Indian Ordnance Factory, which were exempt from duty under relevant exemption notifications. The respondent availed CENVAT credit under the CENVAT Credit Rules, 2004 (CCR, 2004).
The dispute arose because the respondent used LPG as a common input for both dutiable and exempted goods. The department issued a show cause notice dated 03.05.2017 proposing recovery of CENVAT credit amounting to Rs. 91,97,469/- under Rule 6(3) of the CCR, 2004, along with interest and penalty. The adjudicating authority noted that the respondent had reversed proportionate CENVAT credit of Rs. 1,09,181/- along with interest of Rs. 60,157/- on 07.07.2017, attributable to common inputs. Relying on judicial precedents, including the Supreme Court decision in Chandrapur Magnet Wires and Tribunal rulings, the adjudicating authority accepted the proportionate reversal and set aside the demand. This view was upheld by the Commissioner (Appeals).
