Sudhan Spinning Mills Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The appellant, a manufacturer of cotton yarn, availed Cenvat credit on capital goods and input services and utilized such credit for payment of duty on exported goods while also claiming rebate. The appellant used common input services in the manufacture of both dutiable and exempted final products and reversed the proportionate credit attributable to exempted goods in terms of Rule 6(3) of the Cenvat Credit Rules, 2004. While computing the value of exempted goods for the purpose of reversal of Cenvat credit, the appellant excluded the value of export goods cleared under Exemption Notification No. 30/2004-CE dated 09.07.2004, goods cleared under the DEPB scheme, and goods sent for job work, treating them differently from exempted clearances. A show cause notice dated 23.06.2015 was issued alleging incorrect computation of the value of exempted goods. The adjudicating authority confirmed the proposals in the notice through Order-in-Original dated 27.02.2017, and the first appellate authority dismissed the appeal by Order-in-Appeal dated 29.01.2018. The matter was thereafter brought before the Tribunal.
The Tribunal identified the principal issue as whether the appellant was required to reverse credit attributable to common input services used in the manufacture of exempted goods by including the value of cotton yarn exported without payment of duty under the DEPB scheme.
