Case Law Details
C.C.E. & S.T Vs Shreno Limited (CESTAT Ahmedabad)
Introduction: The case of C.C.E. & S.T vs. Shreno Limited has brought to light the critical issue of whether an excise duty demand under Rule 6(3) of the CENVAT Credit Rules, 2004, is applicable when the respondent has already reversed the proportionate CENVAT credit attributed to exempted steam cleared from their factory. The case revolves around the interpretation and application of these rules.
Detailed Analysis: At the core of this case is the question of whether a company is obligated to pay excise duty at rates of 10%, 8%, or 6% on the value of exempted steam cleared from the factory when they have already reversed the proportionate CENVAT credit associated with such exempted steam. The Revenue’s position, as presented by the Assistant Commissioner, is based on a judgment by the Hon’ble Bombay High Court in the case of CCE, Thane vs. Nicholas Piramal (India) Ltd., which asserted that once an assessee has claimed credit on common input service, they are required to pay excise duty under Rule 6(3) of the CENVAT Credit Rules.
However, the counsel for the respondent, Shreno Limited, argued that this issue is no longer a matter of debate. They presented precedents from various judgments, both at the tribunal and high court levels, to support their claim. The consistent view is that once the proportionate credit is reversed, no demand under Rule 6(3) is sustainable. They highlighted a recent decision by the Tribunal in the case of M/s. Checkmate Services Pvt Ltd. to illustrate this point.
Conclusion: In a significant ruling, CESTAT Ahmedabad upheld the order-in-original, finding that the demand raised under Rule 6(3) of the CENVAT Credit Rules, 2004, was not sustainable. The case hinged on the fact that the respondent had reversed the CENVAT Credit on common input services attributed to the exempted steam they cleared from their factory. This decision falls in line with the prevailing interpretation of the law, emphasizing that when CENVAT credit is appropriately reversed, there should be no excise duty demand under Rule 6(3). This case sets an important precedent for similar situations involving excise duty on exempted goods with reversed CENVAT credit.
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