Judgment:
S.S. Kang
Heard both sides.
2. The applicants filed this application for condoning the delay of 35 days in filing the appeal. The contention is that the impugned order was not received by the applicants. It is only when the employee of the applicants went to the Range office to file monthly return, it was informed that the adjudication order was passed against the applicants. Thereafter the applicants applied for the adjudication order and on receipt of the same the appeal was filed immediately. In view of the above contention the delay is condoned.
3. The applicants filed the stay application for waiver of pre-deposit of duty of Rs. 1,11,14,478/-, interest and penalty.
4. The applicants are engaged in the manufacture of pharmaceutical products. The demand is confirmed on the ground that the applicants are availing credit on inputs as well as on input services which are used in or in relation to the manufacture of dutiable as well as exempted goods. The case of the Revenue is that the applicants are liable to pay 10/5 % of the value of the exempted goods.
5. The applicants had already reversed an amount of Rs. 27,78,620/- during the pendency of the appeal.
6. The contention of the applicants is that the provisions of Rule 6 of the Cenvat Credit Rules retrospectively amended by Finance Act 2010. As per the amended provisions, in case a manufacturer is availing credit of common inputs/input services which are used in the manufacture of dutiable as well as exempted goods, the manufacturer is liable to reverse the proportionate credit. The contention is that the applicants had availed the credit of service tax and duty paid on common inputs /input services and the applicants are only liable to reverse the credit of approximately R. 2 lakhs which relates to the credit of taxable services which are used in or in relation to manufacture of exempted goods.
7. The applicants relied on the decisions of the Tribunal in the case of Burn Standard Co.Ltd. vs. CCE, Salem – 2010 (262) ELT 786 (Tri-Chennai) and in the case of Foods, Fats and Fertilisers Ltd vs. CCE, Guntur -2009(247)ELT 209(Tri-Bang.
8. Revenue submitted that the applicants had not filed any declaration as provided under the Finance Act for reversal of credit attributable to input/input services used for exempted goods. Therefore, the demand is rightly made. It is also submitted that as the applicants were availing credit in respect of the common inputs as well as input services, therefore, the demand is rightly made.
9. We find that the applicants had already reversed the credit of more than 27 lakhs. Therefore, keeping in view the facts and circumstances of the case, pre-deposit of the remaining dues is waived and recovery thereof is stayed. Stay petition is allowed.
10. Now we take up the appeal for hearing with the consent of both sides. The appellants relied on the provisions of Rule 6 of the Cenvat Credit Rules which are retrospectively amended by the Finance Act, 2010. The Tribunal in the cases relied upon by the appellants held that the reversal of credit on common inputs/input services which are used in the dutiable as well as exempted goods is permissible by introduction of Rule 6(3A) of Cenvat Credit Rules, 2004 as the amendment having retrospective effect. In view of the above decisions, the impugned order is set aside and the matter is remanded to the adjudicating authority to decide afresh after affording an opportunity of hearing to the appellants.
11. The appeal is allowed by way of remand.