Cenvat Credit : If percentage payment at 8 per cent/10 per cent of exempted goods has been made as per rule 6(3) of CENVAT Credit Rules, 2004, assessee cannot be asked to reverse credit pertaining to common inputs
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[2015] 53 taxmann.com 23 (Madras)
HIGH COURT OF MADRAS
Commissioner of Central Excise, Chennai IV Commissionerate
v.
Bonfiglioli Transmissions (P.) Ltd.*
R. SUDHAKAR AND MRS. PUSHPA SATHYANARAYANA, JJ.
C.M.A. NO. 1945 OF 2008†
NOVEMBER 27, 2014
Rule 6, read with rule 2(d) and rule 2(e), of the Cenvat Credit Rules, 2004 - CENVAT Credit - Exempted and Dutiable Goods or Exempted and Taxable Services, Obligation of assessee - Period from 1-6-2001 to 31-10-2006 - Assessee was manufacturing gear motor assembly using 19 components and was clearing them : (a) under claim for exemption, for use in windmills, and (b) also, on payment of duty - Assessee did not keep separate accounts and paid 8 per cent /10 per cent of exempted goods as per rule 6(3)(b) taking entire credit - Department argued that 16 out of 19 components were used exclusively in exempted goods and were ineligible for credit - Tribunal found that since same final product was cleared under exemption as well as on payment of duty, inputs were commonly used in making exempted as well as dutiable goods - HELD : Rule 6(1) or Explanation III to rule 6(3) applies when inputs are exclusively used in manufacture of exempted goods - In view of specific finding of Tribunal that inputs were used both in exempted and dutiable goods, which is not challenged by revenue : (a) payment of 8 per cent/10 per cent under rule 6(3)(b) was valid; and (b) Explanation III to rule 6(3) would not apply; and (c) rule 6(1) would also not apply [Paras 6 to 9] [In favour of assessee]
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[2015] 53 taxmann.com 23 (Madras)
HIGH COURT OF MADRAS
Commissioner of Central Excise, Chennai IV Commissionerate
v.
Bonfiglioli Transmissions (P.) Ltd.*
R. SUDHAKAR AND MRS. PUSHPA SATHYANARAYANA, JJ.
C.M.A. NO. 1945 OF 2008†
NOVEMBER 27, 2014
Rule 6, read with rule 2(d) and rule 2(e), of the Cenvat Credit Rules, 2004 - CENVAT Credit - Exempted and Dutiable Goods or Exempted and Taxable Services, Obligation of assessee - Period from 1-6-2001 to 31-10-2006 - Assessee was manufacturing gear motor assembly using 19 components and was clearing them : (a) under claim for exemption, for use in windmills, and (b) also, on payment of duty - Assessee did not keep separate accounts and paid 8 per cent /10 per cent of exempted goods as per rule 6(3)(b) taking entire credit - Department argued that 16 out of 19 components were used exclusively in exempted goods and were ineligible for credit - Tribunal found that since same final product was cleared under exemption as well as on payment of duty, inputs were commonly used in making exempted as well as dutiable goods - HELD : Rule 6(1) or Explanation III to rule 6(3) applies when inputs are exclusively used in manufacture of exempted goods - In view of specific finding of Tribunal that inputs were used both in exempted and dutiable goods, which is not challenged by revenue : (a) payment of 8 per cent/10 per cent under rule 6(3)(b) was valid; and (b) Explanation III to rule 6(3) would not apply; and (c) rule 6(1) would also not apply [Paras 6 to 9] [In favour of assessee]
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