2023 (3) TMI 1365 - AT - Central Excise

CENVAT Credit - duty paid on the inputs namely craft paper and paper boards purchased from the principal manufacturers - allegation of the department is that the principal manufacturers / suppliers ought to have availed full exemption as per Exemption Notification No.4/2006-CE and should not have cleared the goods under Sl.No.91 paying concessional duty @ 4% - HELD THAT - The very same issue was decided by the Tribunal in the case of M/S. AKSHERA PAPERS VERSUS THE COMMISSIONER OF CENTRAL EXCISE, SALEM (VICE-VERSA) 2018 (9) TMI 1652 - CESTAT CHENNAI wherein the Tribunal observed that The issue decided in the case of M/S. SRIPATHI PAPER BOARDS VERSUS CCE ST, TIRUNELVELI 2018 (9) TMI 891 - CESTAT CHENNAI , where it was held that the assesse has to necessarily pay an amount equivalent to the credit availed on inputs, inputs in the process of manufacture and inputs in the final products lying in stock either by deducting the amount from the balance available in their books of accounts and, if there is no sufficient balance, then, by way of cash payment. With regard to the balance credit available in the appellant s books after such reversing as on 31.03.2010, if any, is lapsed. In the case of M/S. KOVAI MARUTHI PAPER AND BOARDS, M/S. SARASWATHI UDYOG INDIA LTD, SHRI RAM CARTONS, M/S. SRIVARI PACKAGING INDUSTRIES VERSUS CCE, SALEM AND CCE, SALEM VERSUS M/S. SARASWATHI UDYOG INDIA LTD., M/S. KOVAI MARUTHI PAPER AND BOARDS 2018 (5) TMI 474 - CESTAT CHENNAI , the Tribunal had examined whether the principal manufacturers should compulsorily avail exemption at Sl.No.90 which specifies Nil rate of duty. The Tribunal followed the decision in the case of Balakrishna Paper Mills and Others 2015-TIOL-1100 and held that it is not mandatory to avail Sl.No.90 which extends Nil rate of duty and that the assessee has the option to pay duty at concessional rate of 4%. The the demand cannot sustain - appeal allowed.

Summary

Issues:
The issues involved in the judgment are whether the appellant is eligible to avail the credit of duty paid on inputs purchased from principal manufacturers who paid duty at a concessional rate under Notification No.4/2006-CE, and whether the principal manufacturers were required to avail full exemption under the same notification.

Comprehensive Details:

1. Issue 1 - Eligibility of Credit for Duty Paid on Inputs:
The appellants, engaged in manufacturing safety matches and fireworks, purchased paper from a principal manufacturer who paid duty at a concessional rate of 4%. The department contended that the principal manufacturer should have availed full exemption under Notification No.4/2006-CE and not paid 4% duty. The original authority denied the credit availed by the appellants, which was confirmed on appeal by the Commissioner (Appeals). The appellants argued that the exemption under Sl.No.90 of the notification is conditional, and since the principal manufacturer paid duty without availing full exemption, the credit availed by the appellants is lawful. They cited previous Tribunal decisions supporting their position.

2. Issue 2 - Requirement of Full Exemption by Principal Manufacturers:
The department alleged that the principal manufacturers should have availed full exemption under Notification No.4/2006-CE and not cleared goods paying concessional duty at 4%. The Tribunal referred to previous cases where it was held that under the notification, Sl.No.90 with a 'Nil' rate of duty is controlled by condition No.10, while Sl.No.91 with a 4% tax rate is controlled by condition No.11. The Tribunal concluded that it is not mandatory for principal manufacturers to avail the 'Nil' rate of duty at Sl.No.90 and that they have the option to pay duty at the concessional rate of 4%.

3. Final Decision:
Considering the facts and precedents, the Tribunal allowed the appeal, setting aside the impugned order. The Tribunal held that the demand for denying credit cannot be sustained based on the previous decisions and allowed the appeal with consequential relief, if any.

This judgment clarifies the eligibility of the appellant to avail credit for duty paid on inputs purchased from principal manufacturers who paid duty at a concessional rate, and the requirement for principal manufacturers to avail full exemption under Notification No.4/2006-CE. The Tribunal's decision was based on the interpretation of the conditions specified in the notification and previous Tribunal rulings on similar issues.