2013 (4) TMI 706 - AT - Central Excise

Waiver of pre deposit - Reversal of CENVAT Credit - exemption under Notification No. 30/2004-C.E., dated 9-7-2004 - whether Cenvat credit lying in balance when the appellant started availing full exemption under Notification No. 30/2004-C.E., dated 9-7-2004, is required to be reversed or not - Held that - There was accumulated credit lying in Cenvat credit account which the Revenue is holding that the same will stand lapsed on the date appellant started availing benefit of Notification No. 30/2004-C.E. It is apparent from the facts on record that the provisions of Rule 11(3) of the Cenvat Credit Rules, 2004 were inserted with effect from 1-3-2007 as per Notification No. 10/2007-C.E. (N.T.), dated 1-3-2007. The period involved in the present proceedings is March, 2006. It has been held by the Hon ble Karnataka High Court in the case of C.C. Ex., Bangalore-II v. Gokaldas Intimate Wear (2011 (4) TMI 1123 - KARNATAKA HIGH COURT) that, the assessee is entitled to the credit with respect to the inputs and inputs contained in the goods lying in stock on the date prior to exemption Notification, and that amendment brought under Notification No. 10/2007-C.E. (N.T.) will have only prospective applicability. Further, this very Bench in the case of Sunflag Filaments Industries and others under Order No. M/11719 to 11722/WZB/AHD/2013, dated 2-4-2013, has granted unconditional stay on the same issue. - prima-facie appellant has made out a case for complete waiver of confirmed dues. Accordingly, stay is granted from recovery of confirmed dues till the disposal of the appeal. - Stay granted.

Summary

Issues involved:
Whether Cenvat credit balance is required to be reversed when availing full exemption under Notification No. 30/2004-C.E.

Analysis:
The case revolved around the issue of whether Cenvat credit balance needed to be reversed upon availing full exemption under Notification No. 30/2004-C.E. The appellant argued that Rule 11(2)(3) of the Cenvat Credit Rules, 2004, which required such reversal, was not applicable to the period prior to 1-3-2007. The appellant cited the judgment of the Hon'ble Karnataka High Court and a previous order of the bench where waiver of pre-deposit was allowed on a similar issue.

The learned A.R. contended that as per Rule 11(2) & (3) of the Cenvat Credit Rules, 2004, unutilized credit upon availing exemption shall lapse. After hearing both sides, it was noted that the provisions of Rule 11(3) were inserted with effect from 1-3-2007. The appellant had accumulated credit in the Cenvat account, and the Revenue argued that it would lapse upon availing the exemption. However, based on the Karnataka High Court judgment and a previous bench order, it was established that the appellant was entitled to the credit with respect to inputs and goods in stock before the exemption date, and the amendment had prospective applicability.

Considering the case laws and observations, the Tribunal found that the appellant had a prima facie case for a complete waiver of confirmed dues. Therefore, a stay was granted from the recovery of confirmed dues until the appeal's disposal. The decision was based on the retrospective nature of the rule and the appellant's entitlement to the credit as per legal precedents.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal provisions involved, relevant case laws cited, and the Tribunal's decision based on the interpretation of the law and precedents.