2015 (10) TMI 1790 - AT - Central Excise

Benefit of Notification No. 30/2004-C.E., dated 1-3-2004 - Non-availment of Cenvat credit - held that - at the time of clearance of the said exempted final products, the appellant have paid 6% of the amount of the value of the said exempted products in terms of the provisions of Rule 6(3)(i). In terms of the provisions of Rule 6(3D), the reversal of an amount in terms of the Rule 6(3) shall be deemed to be non-availment of Cenvat credit for the purpose of exemption notification, wherein any exemption is granted on the condition that no Cenvat credit of inputs and input services shall be taken. Inasmuch as the appellant have reversed 6% of the amount in terms of the provisions of Rule 6(3), it has to be held as if no Cenvat credit was ever taken by the appellant in terms of the provisions of Rule 6(3D). In such a scenario, it can be safely concluded that the appellant have fulfilled the conditions of notification in question. - appellant has admittedly reversed the amount in terms of Rule 6(3), it has to be deemed that no credit was taken in which case the condition of notification is held to have been fulfilled - Stay granted.

Summary

Issues:
1. Denial of benefit of Notification No. 30/2004-C.E. to the appellant.
2. Fulfillment of conditions for exemption under the notification.
3. Interpretation of Rule 6(3) and Rule 6(3D) regarding Cenvat credit.
4. Applicability of the explanation to Rule 3 in the context of exemption conditions.

Analysis:
1. The judgment deals with the denial of the benefit of Notification No. 30/2004-C.E. to the appellant due to the alleged non-fulfillment of the condition of non-availment of Cenvat credit.

2. The appellant had paid 6% of the value of the exempted products at the time of clearance, as required by Rule 6(3)(i). The reversal of this amount under Rule 6(3D) is deemed as non-availment of Cenvat credit for the purpose of exemption notification. By complying with this provision, it was established that the appellant fulfilled the conditions of the notification.

3. The lower authorities referred to the explanation to Rule 3, emphasizing the importance of fulfilling the condition of non-availment of credit of duty paid on inputs as prescribed in the notification. The judgment clarifies that the condition can be met either by not availing the credit initially or by reversing a specific amount of the exempted product's value under Rule 6(3), triggering the applicability of Rule 6(3D to establish non-availment of credit.

4. As the appellant had reversed the required amount under Rule 6(3), it was deemed that no credit was taken, thereby fulfilling the condition of the notification. Consequently, the stay petition was unconditionally allowed based on this prima facie view. The judgment highlights the importance of correctly interpreting and applying the relevant rules and notifications to determine the fulfillment of exemption conditions.