Case Law Details
Neelachal Ispat Nigam Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
Introduction: In a recent ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Kolkata, Neelachal Ispat Nigam Limited found itself at the center of a tax dispute. The CESTAT decision pertained to the confirmation of an amount due to the non-maintenance of separate records of inputs and input services used by the appellant in the manufacturing of both dutiable and exempted products. This article explores the intricacies of the case and the CESTAT Kolkata’s verdict.
Background of the Case: Neelachal Ispat Nigam Limited, engaged in the manufacturing of iron and steel, registered with the central excise department, availed Cenvat credit on inputs and input services. However, the company did not maintain separate accounts for inputs and input services used in the manufacture of their final products. Notably, the company produced both dutiable and exempted products, further complicating the accounting process.
Initiation of Proceedings: Due to the lack of separate accounts for inputs and input services used in the manufacturing process, the authorities invoked Rule 6(3) of the Cenvat Credit Rules, 2004. This rule mandated that the appellant pay an amount equal to 10% of the value of the exempted goods sold during the period from 2005-06 to 2007-08. This initiation of proceedings prompted the appellant to contest the show cause notice.
Appellant’s Defense: The appellant raised a defense based on an amendment introduced in 2010 through Section 73 of the Finance Act, 2010. This amendment aimed to provide relief to taxpayers. It allowed assesses to reverse Cenvat credit for inputs or input services used in the manufacture of final exempted products. However, this reversal needed to be completed within six months from May 18, 2010, and it required a certificate issued by a Chartered Accountant. Additionally, a 24% interest payment for the defaulting period was mandatory. Importantly, this amendment was given retrospective effect.
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