Commissioner of Central Excise Vs Ganges Valley Foods Private Limited (Calcutta High Court)
Summary: The Calcutta High Court dismissed the Revenue’s appeal against the CESTAT, Kolkata order dated June 05, 2024 concerning Ganges Valley Foods Pvt. Ltd. The respondent manufactured dutiable and exempt biscuits during financial years 2010-11 to 2015-16 using common inputs and input services. The Revenue alleged non-compliance with Rule 6 of the CENVAT Credit Rules, 2004 and issued Show Cause-cum-Demand notices dated April 28, 2015 and April 26, 2016 demanding Rs.21,95,15,813/- and Rs.5,78,83,997/-, respectively. The respondent claimed to have reversed proportionate CENVAT credit under Rule 6(3A), while the Revenue sought recovery under Rule 6(3)(i), resulting in a demand of approximately Rs.27.74 crores. The Court held that the choice between the mechanisms under Rule 6(3) rested with the assessee and that the Department could not unilaterally switch the assessee to the more punitive percentage-based option under Rule 6(3)(i). The Court also noted that the respondent had reversed Rs.68,78,976/- out of common credit of Rs.95,88,077/- and held that the evidence established substantial compliance with the substantive objective of Rule 6. The Court upheld the Tribunal’s factual findings, found no perversity warranting interference under Section 35G of the Central Excise Act, 1944, answered the substantial question of law in the positive and against the Revenue, dismissed the appeal and disposed of all connected applications without costs.
