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.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the respondent is liable to pay 10%/8%/6% on the value of exempted Steam cleared from the factory under Rule 6(3) of CENVAT Credit Rules, 2004, when the respondent has reversed the proportionate CENVAT Credit on the common input service attributed to such exempted Steam.
2. Shri Rajesh Nathan, learned Assistant Commissioner (Authorized Representative) appearing on behalf of the revenue appellant reiterates the grounds of appeal. He submits that in terms of the Hon’ble Bombay High Court judgment in the case of CCE., Thane Vs. Nicholas Piramal (India) Ltd- 2009 244 ELT 321 (Bom.) It was held that in case an assessee has taken the credit on the common input service there is no option except to pay 10%/8%/6%, in terms of Rule 6(3) of CENVAT Credit Rules, 2004. Therefore, the order passed by the original Adjudicating Authority is not legal and proper, and the same deserves to be set aside and revenue’s appeal be allowed.
3. Shri Saurabh Dixit, learned Counsel appearing on behalf of the respondent reiterates the findings of the impugned order. He further submits that the issue is no longer res integra, as held in following judgments:
3.1 He submits that there is no dispute that the appellant respondent had reversed the proportionate credit attributed to the exempted steam cleared from the factory of the appellant. Therefore, in such case, demand of 10%/8%/6% under Rule 6(3) is not sustainable. As regard the decision cited by the learned AR on CCE., Thane Vs. Nicholas Piramal (India) Ltd, he submits that this judgments has been time and again considered and distinguished in various judgments by this Tribunal and even various High Courts also taken view that once the proportionate credit is reversed no demand under Rule 6(3) will be sustainable. He also placed reliance on this Tribunal’s recent decision, vide Final Order No. A/12244/2023 dated 10.10.2023, in the case of M/s. Checkmate Services Pvt Ltd.
4. On careful consideration of the submissions made by both the sides and perusal of record. We find that there is no dispute on the fact that the respondent had reversed the CENVAT Credit on the common input service attributed to the exempted steam cleared by the respondent form their factory. Therefore, in view of the judgments cited by the learned Counsel, the demand under Rule 6(3) is not sustainable. In view of the said judgments, the issue is no longer res integra. Therefore, in the present case also, we observed that the learned Adjudicating Authority has rightly dropped the demand raised under Rule 6(3) of CENVAT Credit Rules 2004, and we do not find any infirmity in such order. Hence, the same is maintainable.
5. Accordingly, we uphold the order-in-original. The revenue’s appeal is dismissed.
(Pronounced in the open Court on 20.10.2023)
