Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad REGIONAL BENCH-COURT NO. 1 Excise Appeal No. 11061 of 2019-DB (Arising out of OIA-RAJ-EXCUS-000-APP-018-2019 Dated 19/03/2019 passed by the Commissioner (Appeals) CGST & Central Excise -RAJKOT)

COMMISSIONER OF CGST &

CENTRAL EXCISE- RAJKOT ........Appellant CGST Bhavan, Race Course Ring Road, Rajkot, Gujarat- 360001 VERSUS METAL ALLOYS CORPORATION ........Respondent Plot No 6 & 7 Survey No 232/233/236/237 Vukkage Kajgabavad Jamnagar, Gujarat APPEARANCE:

Shri A R Kanani, Superintendent (AR) appeared for the Appellant Shri Paritosh Gupta, Advocate appeared for the Respondent CORAM:

HON'BLE MEMBER (JUDICIAL), MR. SOMESH ARORA HON'BLE MEMBER (TECHNICAL), MR. SATENDRA VIKRAM SINGH Final Order No. 10182/2026 DATE OF HEARING: 14.11.2025 DATE OF DECISION: 13.03.2026 SATENDRA VIKRAM SINGH The Revenue has filed this appeal against impugned order passed by the Commissioner (Appeals), CGST and Central Excise, Rajkot wherein he had upheld the order of the lower authority and rejected the appeal filed by the Department.

1.1 M/s Metal Alloys Corporation (Respondent) are engaged in the manufacture of Brass falling under Chapter 74 of the Central Excise Tariff Act, 1985 as well as processing of raw materials or semi-finished goods on job work basis. The goods manufactured on Jobwork basis for Indian Ordinance factory were finally exempted from duty under Notification No. 70/1992-CE dated 17.06.1992 as amended vide notification No. 66/1995-CE dated 16.03.1995. They are availing Cenvat credit under Cenvat Credit Rules, 2004 (hereinafter referred to as the “CCR, 2004”). The issue was that the respondent was using LPG which is common input for both dutiable goods as well as exempted goods. The department therefore issued a show cause notice to the respondent on 3^rd May, 2017 proposing recovery of Cenvat Credit of Rs. 91,97,469/- @6%/7% of value of exempted goods/ exempted services under Rule 6(3) of the CCR, 2004 read with Rule 14 of the CCR, 2004 and Section 11A(4) of the Central Excise Act, 1944 along with interest under Rule 14 read with Section 11AA and penalty under Rule 15(2) of CCR, 2004 read with Section 11AC of the Central Excise Act, 1944. Annexure-A to the show cause notice gives details of the amount proposed to be recovered as per Rule 6(3)

of CCR, 2004.

1.2 In Adjudication proceedings, learned Adjudicating Authority in para 5.5 noted that the respondent had reversed proportionate Cenvat Credit of Rs. 1,09,181/- along with interest of Rs. 60,157/- on 07.07.2017 on LPG which is common input used for manufacture of dutiable as well as exempted goods. While setting aside the demand, he relied on the decision of Hon’ble Supreme Court in the case of M/s Chandrapur Magnets Wires (P) Ltd. reported at 1995 (81) ELT 3 (SC) and the decision of CESTAT Mumbai in the case of M/s. Marcedes Benz India Ltd Vs. CCE, Pune-I, reported at 2015 (40) STR 381 and accepted proportionate reversal of credit along with interest. Aggrieved with the above order, Revenue filed before the Commissioner (Appeals) who rejected the department’s appeal by upholding the order of the Adjudicating Authority. Therefore, Revenue filed the present appeal before this Tribunal.

2. In their appeal, Revenue has mentioned the following points: -

• As per Rule 6(1) of the Cenvat Credit Rules, 2004, Cenvat credit shall not be allowed on such quantity of inputs as is used in or in relation to the manufacture of exempted goods or for provision of exempted services. In case, a manufacturer uses inputs and/or input services for manufacture of exempt as well as dutiable goods or for providing exempt as well as taxable services, he shall maintain a separate account as per rule 6(2) of CCR, 2004. In case, such manufacturer is not able to maintain separate account, he shall follow the provisions of Rule 6(3) of the CCR, 2004, The provision of this Rule have been amended from time to time, but the crux is that if a manuf