Tamil Nadu Newsprint and Papers Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
CESTAT Chennai held that proportionate Cenvat Credit reversal under Rule 6(3A) of the CENVAT Credit Rules applies only in case of common input services. The same cannot be applied to credit exclusively used in manufacture of dutiable goods. Accordingly, demand held as unsustainable.
Facts- The appellant is engaged in the manufacture of printing and writing paper falling under Chapter 48 of the Central Excise Tariff. During the relevant period, certain clearances were exempt under applicable notifications; the appellant generated electricity in windmills and also undertook trading of notebooks, both treated as exempted activities for the purposes of Rule 6 of the CENVAT Credit Rules, 2004. The appellant availed CENVAT credit on inputs and input services used commonly and opted for proportionate reversal under Rule 6(3A). The department alleged that the appellant had incorrectly applied the formula by restricting it to common input services and by not properly including the value of electricity and traded goods, and contended that the appellant was liable either to pay 5%/6% of the value of exempted goods under Rule 6(3)(i) or to reverse a higher amount under Rule 6(3A). Aggrieved by the confirmation of the demands, interest and penalties, the appellant has filed the present appeals.
