2015 (10) TMI 1556 - AT - Central Excise

Denial of CENVAT Credit - Whether a manufacturer is required to reverse the cenvat credit taken by him in respect of the inputs which are proved to have been used in manufacture of the goods which are liable to concessional rate of duty - Held that - In view of the Notification no.60/2003-CE dated 29.07.03, which provides that no credit taken in respect of the inputs which are used in manufacture of the final products on which benefit of concessional rate of duty has been availed by the appellant in terms of notification no.60/2003-CE ibid. - in the case of Surya Roshini Ltd. Vs. CCE, Meerut-II 2015 (10) TMI 984 - CESTAT NEW DELHI , a similar issue came up before this Tribunal, wherein the appellant were manufacturer of electric bulbs and procuring inputs,capital goods and availing cenvat credit thereon. Thereafter they opted for availing exemption under notification no.50/2003-CE i.e. the area based exemption. Revenue is of the view that as the appellant have opted for exemption from duty, therefore, on the day for opting for exemption, whatever input/ inputs contained in work-in-progress and final product, the appellant is required to reverse the cenvat credit. - at the time when appellant took cenvat credit on inputs, their final product was dutiable and later on, they opted for availing benefit of concessional rate of duty as per notification no.50/2003 - appellant is not required to reverse the cenvat credit on inputs, inputs contained in work in progress/finished goods lying in their factory on the said date - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Change of cause title application.
2. Demand of duty, interest, and penalty for non-reversal of cenvat credit.
3. Interpretation of Notification no.60/2003-CE regarding reversal of cenvat credit on inputs.

Change of Cause Title Application:
The appellants filed miscellaneous applications for extension of stay and for a change of cause title from SPL Ltd. to M/s. Somany Ceramics Limited. The Tribunal allowed the change of cause title as the appellant obtained the necessary certificate for the change of name. Consequently, the appellant will now be known as Somany Ceramics Ltd.

Demand of Duty, Interest, and Penalty for Non-Reversal of Cenvat Credit:
The appellants, manufacturers of ceramic tiles, were in appeals against the demand of duty, interest, and penalty for not reversing the cenvat credit account on 7.8.2003. The dispute arose when the Departmental Officers found that the appellants had not reversed the cenvat credit availed on inputs as required. The impugned order confirmed the demand of duty, interest, and penalty. The appellants contended that they correctly availed cenvat credit as per rules and did not avail any credit on inputs after opting for a concessional rate of duty. They relied on a High Court decision to support their argument.

Interpretation of Notification no.60/2003-CE:
The main issue was whether a manufacturer should reverse the cenvat credit taken on inputs used in goods subject to a concessional rate of duty under Notification no.60/2003-CE. The Tribunal referred to a similar case decided by the High Court of Himachal Pradesh and another case involving area-based exemption. In both cases, it was held that once cenvat credit is taken on inputs for dutiable goods, even if the final product becomes exempt later, the credit need not be reversed. Relying on these precedents, the Tribunal concluded that the appellant was not required to reverse the cenvat credit on inputs, work in progress, or finished goods. The impugned order was set aside, and the appeals were allowed with consequential relief.

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