2010 (3) TMI 691 - HC - Central Excise

Cenvat credit - notification was amended with effect from 1-3-2002 exempting the said goods. Relying upon the exemption notification the assessee was enjoying the facilities - Commissioner issued show cause notice demanding duty - on the ground that he was not eligible to avail Cenvat Credit and the goods manufactured by the assessee are not utilised during the relevant period - CESTAT, in extending the benefit of CENVAT Credit to inputs lying un-utilised, inputs contained in semi-finished goods, and also on the inputs contained in the finished goods lying in stock in contrary to the provisions of Rule 6(1) of CCR, 2002, is correct - order passed by the Commissioner of Appeals and the Tribunal cannot be interfered with and that the question of law has to be answered against the revenue for the following reasons Admittedly, by virtue of notification No. 6/2002, the assesses has utilised the credit and thereafter an exemption has been granted to such rules.

Summary

Issues:
1. Interpretation of CENVAT Credit provisions under Rule 6(1) of CCR, 2002.

Analysis:
The case involved the respondent-assessee engaged in manufacturing Pregnancy Test Kits and availing Cenvat credit facilities under Notification No. 6/2003. The Commissioner issued a show cause notice alleging the assessee was not eligible for the credit due to non-utilization of goods during the relevant period. The Commissioner's order was appealed before the Commissioner of Appeals, which was allowed on the grounds of no time limit for clearing finished products. The revenue then appealed to CESTAT, which dismissed the appeal based on a previous judgment. The present appeal raised the issue of extending CENVAT Credit to unutilized inputs, semi-finished goods, and finished goods contrary to Rule 6(1) of CCR, 2002.

The High Court, after hearing arguments, upheld the orders of the Commissioner of Appeals and CESTAT. The Court noted that the assessee had utilized the credit under the notification before an exemption was granted, and there was no prescribed time limit for selling finished products. Consequently, the Court ruled in favor of the assessee, dismissing the appeal raised by the revenue. The judgment highlighted the absence of a time limit for selling finished products and the utilization of credit before the exemption, leading to the decision against the revenue and in favor of the assessee.

Overall, the judgment emphasized the application of CENVAT Credit provisions, specifically Rule 6(1) of CCR, 2002, in the context of utilizing credits, exemption notifications, and the absence of time limits for selling finished products. The decision clarified the interpretation of the law in favor of the assessee based on the specific circumstances and legal provisions involved in the case.