CX - FA, 2010 amended rule 6 with retrospective effect allowing reversal of credit attributable to inputs used in or in relation to manufacture of exempted goods - assessee to make application within one month and seek benefits: HC
By TIOL News Service
AHMEDABAD, JAN 06, 2017: AGAINST the order dated 21.01.2009 passed by the CESTAT, the Revenue is before the Gujarat High Court with an Appeal to consider the following substantial questions of law:-
I. Whether in the facts and the circumstances of the case, the assessee was required to pay an amount equal to 8% of the total price of the exempted goods, as per Rule 6(3)(b) of the CENVAT Credit Rules, 2002, as the inputs were used in the manufacture of dutiable and exempted final goods and exempted goods?
II. Whether the CESTAT was right in allowing the assessee for the subsequent reversal of the CENVAT credit taken, instead of insisting upon the assessee to pay an amount equal to 8% of the total price of the exempted goods as per the Rule 6(3)(b) of the CENVAT Credit Rules, 2002?"
The counsel for the Revenue submitted that while passing the impugned order, the tribunal relied upon the decision of the Larger Bench in Nicholas Piramal (India) Limited - 2008-TIOL-614-CESTAT-MUM .
However, since the cited decision was subsequently reversed / set aside by the Bombay High Court - 2009-TIOL-649-HC-MUM-CX, the impugned judgement cannot sustained and the same deserves to be quashed and set aside.
The respondent submitted that after the impugned order was passed by the tribunal, by Finance Act, 2010, Rule 6 of the CENVAT Credit Rules, 2002 has been amended [allowing reversal of credit attributable to inputs used in or in relation to manufacture of exempted goods] and the assessee shall be entitled to the benefit of such amended Rule which has been amended retrospectively w.e.f. 1/3/2002, however, on complying with the procedure as required and as mentioned in the amended Rules.
Nonetheless, the respondent was required to approach the appropriate authority within a period of six months from the date of Finance Act, 2010, however, at the relevant time, the respondent did not approach the appropriate authority as there was already a decision in favour of the respondent which was appealed by the department before this High Court.
Inasmuch as it is requested that a suitable observation, while quashing and setting aside the impugned order passed by the tribunal, be made that if the respondent makes an appropriate application for getting benefits of amendment of Rule 6 of CCR, 2002 as per Finance Act, 2010, within a period of two months with supporting documents, case of the respondent may be directed to be considered in light of the amended provision of CENVAT Credit Rules, 2002, as amended by Finance Act, 2010, which has been amended w.e.f. 1/3/2002.
Reliance is placed on the decision in Shree Rama Multi Tech Ltd. - 2011-TIOL-940-HC-AHM-CX.
The High Court observed that in view of the Bombay High Court decision in Nicholas Piramal (India) Limited - 2009-TIOL-649-HC-MUM-CX the Tribunal order cannot be sustained and needs to be quashed and set aside.
In the matter of the request made by the respondent seeking benefits of amended Rule 6 of the CCR, 2002, amended by Finance Act, 2010, retrospectively w.e.f. 1/3/2002, the High Court observed that considering the decision of the Division Bench in the case of Shree Rama Multi Tech Ltd. (supra), if the respondent makes an application within a period of one month with supporting documents, the same be considered (by appropriate authority) in accordance with law and on merits and in light of the amended Rule 6 of the CENVAT Credit Rules, 2002, as amended by Finance Act, 2010.
The appeal was allowed to the aforesaid extent.
(See 2017-TIOL-35-HC-AHM-CX)
