2026-VIL-1752-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - CENVAT Credit on capital goods, inputs and input services where both dutiable and exempted goods are manufactured - Appellant, a manufacturer of biscuits valued under Section 4A, where biscuits below a specified retail price are fully exempt under Notification No.03/2006-C.E. , was issued a Show Cause Notice for reversal of CENVAT Credit on the ground that it manufactured both dutiable and exempted goods and had irregularly taken credit on capital goods, inputs and input services - Appellant contended that credit on capital goods cannot be denied unless the goods are exclusively used in the manufacture of exempted goods, and that credit on inputs and input services was taken only in proportion to dutiable goods - Whether the demand for reversal of CENVAT Credit is sustainable - HELD - As per Rule 6(4) of the CENVAT Credit Rules, 2004, CENVAT Credit is not allowable on capital goods only when they are exclusively used in the manufacture of exempted finished goods. The Appellant has admittedly been manufacturing dutiable as well as exempted goods, and the Department has failed to come out with any documentary evidence that the Appellant was in fact not manufacturing dutiable goods. The demand on capital goods therefore stands set aside on merits. As regards inputs and input services, the credit availed is a very small amount when compared with the huge turnover of the Appellant, and this itself shows that it represents only the proportionate credit taken in respect of dutiable goods. There is no reason to uphold the confirmed demand even in respect of inputs and input services - The demand is set aside on merits - Extended period of limitation for demand of CENVAT Credit - Suppression of facts - Appellant took CENVAT Credit at fifty percent in the year of receipt and the balance in the next financial year, and contended that all details were recorded in the RG-23C Register and disclosed in the monthly Returns filed with the Department, so that the Department was aware of the credit taken - Whether the extended period could be invoked for the demand of CENVAT Credit - HELD - The Appellant has disclosed all the details of the credit taken in its RG-23C Register as well as in the ER-1 Returns. A perusal of the ER-1 Return filed for one of the months shows that credit has been taken on inputs and capital goods during the said period and that the utilization has also been shown. No case of suppression of facts or wilful mis-statement is made out against the Appellant - The confirmed demand for the extended period is set aside on account of time bar, and the appeal is allowed
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