2026-VIL-1128-CESTAT-AHM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Reversal of amount equal to 6% of the value of exempted goods cleared in terms of Notification No.30/2004-CE - Rule 6(3) of CCR, 2004 – Appellant availed CENVAT credit on inputs used in the manufacture of exempted goods in May 2017 and reversed an amount equal to 6 percent of the value of such exempted goods in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 – Denial of benefit of exemption notification and demand of duty at the merit rate of 12.5 percent ad valorem, along with interest and penalty - Whether the appellant who avails exemption under Notification No. 30/2004-CE, which contains a condition that no CENVAT credit on inputs shall be taken, can claim the exemption benefit if the manufacturer initially takes CENVAT credit on inputs but subsequently reverses the credit equal to 6 percent of the value of exempted goods in terms of Rule 6(3) of the CENVAT Credit Rules, 2004 – HELD - The payment of an amount under Rule 6(3) is deemed to be CENVAT credit not taken for the purpose of an exemption notification - Though sub-rule (3D) was inserted with effect from 01.04.2011, it is clarificatory in nature and has retrospective effect. The reversal of 6 percent of the value of exempted goods in terms of Rule 6(3)(i) is one of the mechanisms to expunge the CENVAT credit availed by the assessee. Therefore, even after taking the credit, if the assessee reverses an amount as provided in Rule 6(3), it amounts to non-availment of CENVAT credit and the condition of the notification stands complied - The revenue authorities who themselves had initially directed the appellant to reverse the CENVAT credit at 6 percent, and subsequently initiating proceedings based on a change in interpretation is contrary to settled legal position that extended period of limitation cannot be invoked for change in opinion. The appellant is legally entitled to the exemption notification - The impugned order set aside and the appeal is allowed
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