2026-VIL-893-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Reversal of CENVAT credit on inputs and input services attributable to electricity sold to sister concerns – applicability of Rule 6 of CENVAT Credit Rules, 2004 - Appellant reversed the proportionate CENVAT credit in respect of inputs and input services attributable to power sold to sister concerns and informed the department of all reversals from time to time through defence replies and show cause responses – Dept confirmed the demand for payment at the rate of 5-6% of the value of electricity wheeled out, invoking Rule 6(3A) of CENVAT Credit Rules, despite acceptance of one such reversal payment in an earlier show cause notice - Whether the appellant, having reversed the proportionate CENVAT credit on inputs and input services attributable to electricity sold to sister concerns, remains liable to pay demand under Rule 6(3A) of CENVAT Credit Rules – HELD – The reversal of CENVAT credit availed on inputs and input services attributable to electricity sold is equivalent to non-availing of credit itself. The Supreme Court in Chandrapur Magnets Private Limited versus Collector of Central Excise, Nagpur and Commissioner of Central Excise and Customs versus Precot Meridian Limited established the principle that reversal of credit amounts to not taking credit at all - Once proportionate reversal of CENVAT credit takes place, it tantamount to non-availing of the input service credit, which signifies compliance with Rule 6(3A) - The decision relied upon by the revenue is not applicable as it pertains to the earlier provision of CENVAT Credit Rules prior to amendment by Finance Act, 2010. The appellant's monthly reversals, even if done at a later stage, constitute compliance with the mandatory requirements of Rule 6(3A), and therefore no demand can be sustained against the appellant - The impugned orders are set aside and the appeals are allowed
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