Castrol India Ltd. Vs Commissioner of CE & ST (CESTAT Mumbai)
Proportionate reversal of CENVAT credit amounts to maintenance of separate records under Rule 6; demand for reversal of total credit set aside: CESTAT Mumbai
The appellant is a leading manufacturer of lubricants. It is also engaged in trading of similar products. It availed cenvat credit on inputs under Rule 3(1) of the Cenvat Credit Rules. It reversed pro rata credit relating to trading under Rule 6(3) of the said rules. However; the Department was of the view that it should reverse “total cenvat credit” in terms of formula provided under Rule 6(3A) of the Rules. A demand of over Rs. 1 crore was confirmed along with interest and penalties. Hence; appeal.
The Hon’ble CESTAT, Mumbai set aside the order and allowed the appeal. It held: (i) cenvat credit is availed on pro rata basis and proportionate reversal for trading activity amounts to maintenance of separate records under Rule 6; (ii) Rule 6(3) only provides for options for complying with bar under Rule 6(1); (iii) the term “total cenvat credit” in formula provided under Rule 6(3A) refers to only common credit; (iv) follows its earlier decision in case of Reliance Industries and allows the appeal.
