2013 (3) TMI 317 - AT - Central Excise

Benefit of Notification No. 30/2004-C.E. denied - no balance of inputs/semi-finished products/finished products with the assessee - liability of duty on the finished goods cleared by them by availing the benefit of the said notification confirmed with interest on the said amount and penalties - Held that - It is an admitted fact that the appellant had only carried forward the closing balance in the monthly returns filed with the departmental authorities and there was no utilization of the said amount in any of the months, as the appellant need not have to discharge duty finished goods, after availment of notification No. 30/2004-C.E. It is to be noted that there is no dispute as to the fact that from 10th March, 2005, when the assessee-appellant opted for the availment of exemption provided under Notification No. 30/2004-C.E., he has not availed any Cenvat credit on the inputs which were procured, for manufacture of final products. The above said condition is only to dissuade an assessee, to avail double benefit i.e. to avail Cenvat credit and also to claim benefit of exemption of payment of excise duty given in the notification. As the Adjudicating Authority s findings on this point only states that the appellant had availed Cenvat credit prior to exercise of option to benefit of Notification No. 30/2004-C.E., had been lying idle in their Cenvat credit and had to be reversed prior to or on claiming benefit of Notification No. 30/2004-C.E. The basic point which is missed by the Adjudicating Authority in the entire exercise, is that if there are no inputs/semi-finished goods lying in stock as on 10th March, 2005, when the assessee exercised an option, the Cenvat credit could not be utilized for any other purpose and has to be considered as lapsed as per the provision of Cenvat credit rules, which were in force during the period. Also take note that the appellant, as per direction in the stay order, has specifically written to the authorities indicating that the amount of credit which was carried forward by them has to be treated as lapsed while exercising the option for exemption under Notification No. 30/2004-C.E., dated 9-7-2004. If that be so, no reason to deny the benefit of Notification No. 30/2004-C.E. from the date they exercised the option - in favour of assessee.

Summary

Issues:
Denial of benefit of Notification No. 30/2004-C.E. - Liability for duty on finished goods - Interest and penalties for non-compliance with notification conditions.

Analysis:
The case involved a dispute regarding the denial of the benefit of Notification No. 30/2004-C.E. to the appellant, who was engaged in the manufacture of Knitted Fabrics/Gray Fabrics and availing Cenvat credit under Cenvat Credit Rules, 2004. The issue arose when it was observed that the appellant had a Cenvat credit balance of Rs. 5,27,731/- which was not reversed upon availing the exemption under the said notification. The Adjudicating Authority confirmed the demand of Central Excise duties, imposed penalties on the appellant, but dropped the proceedings for confiscation. The appellant contested the show-cause notice, arguing that the balance amount was not utilized during the period of availing the notification's benefit. The Tribunal considered the submissions and records, noting that the appellant had only carried forward the balance amount and had not utilized it post-availing the notification. The Tribunal analyzed the conditions of Notification No. 30/2004-C.E. and found that the appellant had not availed any Cenvat credit on inputs after opting for the exemption. The Tribunal emphasized that the Cenvat credit, if not utilized, would be considered lapsed as per the Cenvat credit rules in force at the time. Therefore, the Tribunal set aside the impugned order, allowing the appeals.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the appellant was eligible for the benefit of Notification No. 30/2004-C.E. as they had not availed any Cenvat credit on inputs after opting for the exemption. The Tribunal emphasized that the appellant's balance amount was not utilized and was treated as lapsed, in compliance with the direction to do so. Therefore, the impugned order was set aside, and the appeals were allowed.