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2016 (12) TMI 78 - AT - Central ExciseRefund of CENVAT credit reversed - due to the excisable goods become exempted, the appellant reversed CENVAT credit contained in the finished goods in process and final product. Part of the credit was reversed from CENVAT credit account and partly from PLA - Held that - at the time of exemption Notification No. 30/2004-CE came into effect, there was no provision for reversal of credit in respect of inputs contained in the said exempted goods or lying as such for the reason that credit was availed prior to issuance of the exemption notification and at the time of availment of credit there was no bar and the CENVAT credit availed was correct and legal. As regards the provision for reversal of CENVAT credit in the aforesaid circumstances, the same was specifically inserted vide Rule 11(3) w.e.f. 01/03/2007, which cannot be applied retrospectively - refund justified - appeal allowed - decided against appellant-Revenue.
Issues Involved:
1. Reversal of CENVAT credit due to exemption of excisable goods. 2. Refund claim rejection and appeal against the order-in-original. 3. Interpretation of Notification No. 30/2004-CE conditions. 4. Provision for reversal of CENVAT credit prior to the exemption notification. 5. Applicability of the reversal provision introduced in Rule 11(3) w.e.f. 01/03/2007. 6. Comparison with relevant case laws. Analysis: 1. The judgment revolves around the issue of reversing CENVAT credit due to the exemption of excisable goods. The appellant initially reversed the credit but later filed a refund claim after realizing that the reversal was not required. The appeal was rejected by the adjudicating authority, leading to an appeal before the Commissioner (Appeals) and subsequently to the Tribunal. 2. The rejection of the refund claim was based on the interpretation of Notification No. 30/2004-CE, which stated that the exemption would not apply to goods for which duty credit on inputs was availed under the CENVAT Credit Rules 2002. The Revenue argued that the reversal of credit was in compliance with this condition, and hence, no refund was due. However, the Commissioner (Appeals) allowed the appeal of the appellant, leading to the Revenue's challenge before the Tribunal. 3. The respondent's counsel contended that the issue did not concern the eligibility under the notification but rather whether the reversal of CENVAT credit, availed before the notification, was necessary. The counsel highlighted that the provision for such reversal was introduced later, and at the relevant time, there was no requirement to reverse the credit in case of exempted products. 4. The Tribunal analyzed the relevant provisions and case laws cited by the respondent's counsel, emphasizing that the provision for reversal of CENVAT credit in the circumstances of the case was introduced only later, and it could not be applied retrospectively. The Tribunal found that at the time of availing the credit, there was no bar, and the credit availed was legal. Therefore, the impugned order was upheld, and the Revenue's appeal was dismissed. In conclusion, the Tribunal's judgment clarified the applicability of the reversal provision in the context of exemption notifications and established that the reversal of CENVAT credit was not required in this case due to the absence of such a provision at the time of availing the credit. The decision was supported by relevant legal provisions and precedents, ensuring a fair and just outcome in the matter.
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