2015 (10) TMI 101 - AT - Central Excise

Denial of CENVAT Credit - exempted goods or not - exemption under the Served from India Scheme i.e. SFIS - Benefit of exemption Notification No. 34/2006-CE dated-14/06/2006 - assessee contended that clearance of such goods cannot be treated as Exempt in as much as instead of duty payment through account current i.e. PLA or CENVAT Credit A/cs. of the manufacturer, the amount of duty is to be debited from such SFIS Certificate - Held that - at the time of passing the order, the case laws cited by the Assessee were not available to the Ld. Commr. and therefore, he had no occasion to examine the facts of the present case, in light of the case laws (2014 (1) TMI 169 - GUJARAT HIGH COURT) and 2012 (7) TMI 679 - GUJARAT HIGH COURT . We also find that Ld. Commr. has not recorded his findings on the issue raised by the Revenue whether the credit could be allowed on the duty paid materials used in the manufacture of impugned exempt goods. Revenue has further contended that while allowing the said credit, the Ld. Commr. has traversed beyond the scope of the show cause notice. Both sides agreed that these issues to be addressed afresh by the adjudicating authority. In view of the facts and circumstances of the case stated above, we are of the opinion that order passed by the Ld. Commissioner requires to be set aside - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
- Appeal filed by the assessee and the Revenue against the order of the Commissioner, Central Excise, Kolkata regarding duty payment and CENVAT Credit on exempted goods.
- Whether the goods cleared under the 'SFIS Scheme' are exempt or not.
- Allowance of CENVAT Credit on duty paid materials used in the manufacture of exempt goods.
- Whether the order passed by the Commissioner requires to be set aside and merits fresh decision.

Analysis:
1. The appeals were filed by the assessee, a manufacturer of excisable goods, and the Revenue against the Commissioner's order. The assessee cleared goods under the 'SFIS Scheme' without duty payment, relying on exemption Notification No. 34/2006-CE. The Commissioner demanded payment under Rule 6(3) of CENVAT Credit Rules, alleging ineligibility for CENVAT Credit on inputs used in manufacturing exempt goods. The Revenue also appealed against allowing CENVAT Credit on duty paid materials used for exempt goods.

2. The assessee argued that goods under the 'SFIS Scheme' are not exempt, citing case laws supporting their position. They requested a remand due to the unavailability of relevant judgments during the Commissioner's decision. The Revenue contended that allowing CENVAT Credit on duty paid materials for exempt goods was beyond the show cause notice's scope, referencing cases where similar schemes were considered exempt.

3. The Tribunal found that the Commissioner's order needed reconsideration in light of the case laws cited by the assessee, which were not available earlier. The Commissioner did not address crucial issues raised by both parties, necessitating a fresh decision. Consequently, the Tribunal set aside the order and remitted the matter to the Commissioner for a comprehensive reevaluation, ensuring a fair hearing for both sides.

4. Ultimately, the appeals by both the assessee and the Revenue were allowed by way of remand, emphasizing the need for the Commissioner to revisit the issues raised and make a well-founded decision after considering all relevant aspects. The order was to be pronounced after affording both parties a reasonable opportunity to present their arguments.