2013 (10) TMI 662 - AT - Central Excise

Option to avail Exemption Notification No.29/2004 or 30/2004 CE yarn manufactured and cleared for export - Waiver of Pre-deposit - Whether the applicant have option to avail the Notification No. 29/2004-CE where the rate of duty is 4% and the appellant have not availed input duty credit - Exemption Notification No. 29/2004-CE is an unconditional exemption which prescribes a rate of duty of 4% advelorum - Held that - There is no condition in the notification that for availing of the exemption prescribing concessional rate of duty of 4% adv., input duty Cenvat Credit must be availed - The condition of non-availment of input duty Cenvat Credit is for nil duty under Notification No. 30/2004 - this does not mean that an assessee not availing input duty credit cannot avail the exemption under Notification No. 29/2004-CE, as this is an unconditional Notification - When an assessee does not avail of input duty credit, he has option to pay 4% duty under Notification No. 29/2004-CE and also the option to clear his goods at nil rate of duty under Notification No. 30/2004-CE and when two exemption Notifications are available to an assessee, he can always opt for the Notification which is most beneficial for him and in this regard the Department cannot force the assessee to avail a particular exemption Notification. Looked at from this point of view, the Department s stand is incorrect. During the period of dispute the appellant was clearing the goods by availing full duty exemption as well as on payment of duty, the capital goods cannot be treated as having been used exclusively in the manufacture of exempted goods and Cenvat Credit in respect of the same cannot be demised - the Appellant have a strong prima facie case in their favour - the requirement of pre-deposit of Cenvat Credit demand, interest and penalty waived for hearing of the appeals and recovery stayed till the disposal of the appeals stay granted.

Summary

Issues:
1. Interpretation of exemption Notifications No. 29/2004-CE and No. 30/2004-CE regarding availing of Cenvat Credit.
2. Eligibility for capital goods Cenvat Credit based on the exemption Notifications.
3. Dispute over the treatment of duty payment under different exemption Notifications.

Analysis:
1. The appellant, a manufacturer of cotton and acrylic yarn, availed exemption Notifications No. 29/2004-CE and No. 30/2004-CE during a specific period. The Department contended that since the appellant did not avail input duty credit for goods cleared under Notification No. 29/04-CE, they should have opted for full duty exemption under Notification No. 30/04-CE. The Department issued Show Cause Notices for recovery of allegedly wrongly availed capital goods amount, leading to a penalty. The Commissioner (Appeals) upheld the decision, prompting the appellant to file an appeal challenging the order.

2. The appellant argued that they did not avail input duty credit for goods cleared under either notification, only capital goods Cenvat Credit. They contended that the capital goods were not exclusively used for exempted goods, thus Rule 6(4) of Cenvat Credit Rules, 2004 did not apply. The Department opposed the stay application, asserting that the appellant should have availed full duty exemption under Notification No. 30/04-CE.

3. The Tribunal analyzed the dispute and found that the appellant had not availed input duty credit during the period in question. The Department's argument that the appellant should have opted for full duty exemption under Notification No. 30/04-CE was deemed incorrect. The Tribunal noted that the appellant had the option to pay duty under Notification No. 29/2004-CE, which prescribed a 4% duty rate without any condition. As the appellant had a strong prima facie case, the requirement of pre-deposit of Cenvat Credit demand, interest, and penalty was waived, and recovery was stayed until the appeal's disposal. The stay applications were allowed based on the appellant's favorable interpretation of the exemption Notifications.

This detailed analysis highlights the key legal arguments, interpretations of exemption Notifications, and the Tribunal's decision to waive the pre-deposit requirement based on the appellant's strong prima facie case.