2016 (3) TMI 8 - AT - Central Excise

Exemption in terms of Notification No. 14/92-Central Excise on protective covers/tarpaulins vide Serial No. 21 - non availment of credit on inputs is a precondition for availing exemption under Notification No. 30/2004-Central Excise dated 09.07.2004 - Held that - We observe that the matter is no more res integra, in view of the decision of this Tribunal in the case of Shivalik Agro Poly Products Ltd. (1999 (9) TMI 215 - CEGAT, NEW DELHI ), which has been upheld by the Hon ble Supreme Court (2005 (4) TMI 69 - SUPREME COURT OF INDIA). In the said case plastic granules were used as input in the manufacture of intermediate product, lay flat tubing which was further used in the manufacture of final product, protective covers/tarpaulins. The Tribunal held in that case that as duty has been paid on lay flat tubings, benefit of exemption in terms of Notification No. 14/92-Central Excise (which has a condition similar to the proviso to Notification No. 30/2004) is available in respect of protective covers/tarpaulins vide Serial No. 21. - Decided in favour of assessee

Summary

Issues:
Manufacturing of fabrics and garments, availing Cenvat credit, benefit of Notification Nos. 29/2004 and 30/2004, eligibility for exemption under Notification No. 30/2004, availing credit of duty on inputs, payment of duty on intermediate goods, legal interpretation of Notification provisions.

Analysis:
The appellants were involved in manufacturing various fabrics and garments while availing Cenvat credit as per the Cenvat Credit Rules, 2004. They intended to avail concessional duty rates for export clearances and full exemption for domestic clearances under Notification Nos. 29/2004 and 30/2004. The issue arose when the Revenue argued that availing CENVAT credit on inputs for garments cleared domestically without duty payment made the appellants ineligible for the benefit of Notification No. 30/2004. The lower authorities upheld the duty demand, interest, and penalty against the appellants, leading to the appeal.

The Counsel for the appellants contended that paying duty on intermediate products, further used in the final product, should qualify them for the Notification No. 30/2004 benefit, regardless of availing CENVAT credit on inputs. They cited a Tribunal decision upheld by the Supreme Court to support their argument. Conversely, the Authorized Representative for Revenue highlighted the proviso to Notification No. 30/2004, emphasizing that availing credit for inputs used in the final product manufacturing made the appellants ineligible for the exemption.

Upon reviewing the arguments and precedents, the Tribunal found the matter settled based on a previous case involving plastic granules used in a similar manufacturing process. In that case, paying duty on intermediate products allowed the benefit of exemption for the final products. Drawing from this precedent, the Tribunal concluded that the appellants should be eligible for the benefit of Notification No. 30/2004 despite availing credit for inputs. Consequently, the Tribunal set aside the lower authorities' orders, allowing the appeal in favor of the appellants.