Rule 6 demand not applicable

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, examined whether Hindustan Zinc Limited was liable to pay 5%/6% of the value of electricity wheeled out or sold to sister concerns and the State Electricity Board under Rule 6 of the CENVAT Credit Rules, 2004 despite having reversed proportionate CENVAT credit attributable to such electricity. 

The Tribunal held that once proportionate credit attributable to exempted activity had been reversed, it would amount to non-availment of credit itself. Relying upon settled Supreme Court jurisprudence and earlier decisions rendered in the assessee’s own cases, the Tribunal set aside the entire demand, interest, and penalties and allowed all three appeals.