- (1.) We have heard Sri B.K. Singh Raghuvanshi, learned counsel for the appellant. The Commissioner of Central Excise, Allahabad has filed this appeal on the following question of law:- "Whether the liability for payment of an amount equal to 8% of the value of the exempted goods under Rule 6(3)(b) of Cenvat Credit Rules, 2002/2004 can be fulfilled by mere reversal of credit involved in the inputs contained in the exempted product?" Learned counsel for the appellant submits that the respondent Company availed Cenvat credit on the Vanadium Penta-oxide, which is a catalyst used in the manufacture of sulphuric acid. On a show cause notice issued, the Company reversed the Cenvat credit amounting to Rs. 76,000/- along with interest of Rs. 12,223/-, taken on the catalyst "Vanadium Penta-oxide".
(2.) The Tribunal has found that the Company cleared Sulphuric Acid partly on payment of duty, and partly on capital consumption, and no duty was paid on captive consumption. They used, duty paid inputs Vanadium Pentoxide, on the exempted final produce - Sulphuric Acid, and calculated the amount of 8% of the value of the exempted goods in terms of Rule (b) of the Central Excise Rules, 2002. The adjudicating authority confirmed the demand of duty, and also imposed penalty along with interest. The Commissioner (Appeals) upheld the adjudication order.
(3.) The Tribunal found that there was no dispute that Vanadium Pentoxide were liable to reverse the credit of Rs. 76,000/- taken on the said inputs used in the exempted finished goods, which they reversed and informed the adjudicating authority. The Tribunal however did not accept the contention of the department that the Company did not follow the procedure under Rule 6(3)(b) in respect of reversal of credit, and relying upon ETA Technology Ltd. v. CCE, Bangalore,2007 6 STR 207 (Tri. - Bang.) : 2007 (212) E.L.T. 371 (Tribunal)], and the decision of Supreme Court in Chandrapur Magnet Wires (P) Ltd. v. Commissioner, 1996 81 ELT 3 allowed the appeal of the assessee.;