2016 (9) TMI 367 - AT - Central Excise

Whether dutiable finished goods manufactured by the Appellant will be another category of manufactured goods when exemption under Notification No.10/97-CE dated 16.03.1997 is claimed - Held that - in the absence of any contrary case law brought on record, Appeal filed by the Appellant is required to be allowed on merits. However, it has been correctly mentioned by the Revenue that in both the relied upon case laws decided by Tribunal in the cases of Commissioner of Central Excise, Chennai v. Magtorq (P) Ltd. 2008 (5) TMI 500 - CESTAT, CHENNAI and Mukerian Papers Ltd. v. Commissioner of C.Ex., Chandigarh 2003 (11) TMI 189 - CESTAT, NEW DELHI , assesses have reversed the credit relatable to the inputs used in the manufacture of exempted goods cleared by those assesses. Accordingly Appeal filed by the Appellant is allowed subject to the condition that proportionate credit with respect to inputs used in the manufacture of finished goods exempted under Notification No.10/97-CE dated 16.03.1997, should be reversed/paid by the Appellant along with 24% interest, if not already paid/reversed. - Decided conditionally in favour of appellant

Summary

Issues:
1. Interpretation of Rule 6 of Cenvat Credit Rules regarding exemption under Notification No.10/97-CE.

Analysis:
The Appellant filed an Appeal against the Order-in-Appeal passed by the Commissioner of Central Excise(Appeals), Kolkata-II. The Appellant, a manufacturer of excisable goods, cleared dutiable finished goods to a research center without duty payment under an exemption. The Advocate argued that Rule 6(3) of Cenvat Credit Rules does not apply as only one category of finished goods is manufactured. The Revenue contended that post-amendments, the Appellant should reverse credit for inputs used in exempted goods with interest. The Tribunal analyzed the issue of whether dutiable finished goods become a different category under the exemption. Referring to a CESTAT Chennai case, it was held that when only one category of final product is manufactured, no additional payment is required for exempted goods. The Tribunal also cited a CESTAT Delhi case supporting this view. Thus, the Appellant's Appeal was allowed, with the condition to reverse proportionate credit for inputs used in exempted goods along with interest if not already done.

This judgment clarifies the application of Rule 6 of Cenvat Credit Rules in cases of claiming exemption under specific notifications. It emphasizes that when a manufacturer produces only one category of final product, additional payments for exempted goods may not be necessary under the Cenvat scheme. The decision aligns with previous tribunal rulings and ensures compliance with credit reversal requirements for inputs used in manufacturing exempted goods.