Whether an assessee is eligible of credit on capital goods used in manufacture of dutiable and exempted final products and also whether the credit would be allowed proportionately or not.

PJ/Case Laws/2012-13/1022

CASE: - M/S GTN INDUSTRIES LTD. V/S COMMISSIONER OF CENTRAL EXICSE, HYDERABAD

CITATION: - 2012-TIOL-197-CESTAT-BANG

ISSUE: - Whether an assessee is eligible of credit on capital goods used in manufacture of dutiable and exempted final products and also whether the credit would be allowed proportionately or not.

BRIEF FACTS:-The appellant is a manufacturer and it cleared a part of their production for export on payment of duty and filed a claim for drawback and a part of clearance to DTA claiming benefit of exemption under notification 29/04-ce and 58/2008-ce. As per rule 6(4) of cenvat credit rules, 2004, the duty paid on inputs used in the manufacture of both dutiable and exempted goods can be claimed proportionately. It was observed that CENVAT credit can be denied to appellant on those capital goods which have been exclusively used for the manufacture of exempted goods vide rule 6(4) of cenvat credit rules, 2004. It is not in dispute that during the period of dispute, the assessee cleared a part of their production on payment of duty for export and subsequently claimed drawback. Another part of their production was cleared to the DTA by availing full exemption from payment of duty.

APPELLANTS CONTENTION:- The appellant filed an application seeking waiver of pre-deposit and stay of recovery in respect of duty of Rs 67,455 and penalty of Rs 10,000. They contended that cenvat credit must be allowed to them proportionately as the inputs were used for manufacture of both exempted and dutiable goods.

RESPONDENTS CONTENTION:- The respondent demanded denial of claim of CENVAT credit by the appellant on certain capital goods for the period from 7-12-2008 to 6-7-2009 on the ground that the said capital goods were used for the manufacture of both dutiable and exempted goods without maintaining the separate accounts.

REASONING OF JUDGEMENT:-Capital goods used for the manufacture of both dutiable and exempted products are not covered by the rule 6(4) of the CENVAT CREDIT RULES, 2004 and hence cenvat credit can be claimed thereon.

DECISION:- The appeal was allowed and the assessee was allowed the cenvat credit.

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PJ/Case Laws/2012-13/1022

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