2026-VIL-225-CESTAT-BLR-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Availment of CENVAT credit on input services and common inputs used for manufacture of dutiable and exempted goods – Demand for reversal of credit - Appellant had not maintained separate records for the utilization of inputs in the manufacture of dutiable and exempted goods as required under Rule 6(2) of the CCR 2004 - Whether the appellant had availed CENVAT credit on input services and common inputs used for the manufacture of both dutiable and exempted goods during the disputed period – HELD - The appellant had not availed CENVAT credit on common input services prior to the audit objection. After the audit objection was raised, the appellant availed the credit on common input services and simultaneously reversed 5% of the amount representing the value of the exempted goods in terms of Rule 6(3)(i) of the CCR 2004. The appellant had categorically submitted that they had not availed CENVAT credit on common input services during the disputed period of August 2009 to March 2011 and had only availed the credit after the audit note was issued on 27.11.2011, which was immediately reversed on 06.02.2012. No contrary evidence was brought on record by the Revenue to indicate that the amount of 5% on the value of exempted goods was not reversed by the appellant. Consequently, the confirmation of demand of interest and imposition of penalty are not justified as the appellant had immediately reversed the 5% of the value of the exempted goods after availing the CENVAT credit on common input services – The appeal is allowed
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