2017 (1) TMI 1127 - AT - Central Excise

SSI Exemption number 08/03-CE dated 01.03.2003 - denial on the ground that the assessee has availed CENVAT credit - The appellant initially availed Cenvat Credit on capital goods to the extent of ₹ 15,317/-, however have reversed the same - whether the SSI benefit will be extended to the appellant? - Held that - Once the credit availed has been reversed it is to be considered as ab initio not availed as held in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE Nagpur 1995 (12) TMI 72 - SUPREME COURT OF INDIA - the appellant will be eligible for the SSI benefit under N/N. 08/03. Payment of Excise duty under protest - rejection of refund claim - Held that - since the appellant will be entitled to the SSI benefit, the refund for the above amount will be admissible on merits. However, the amount will be paid subject to satisfaction of all the conditions prescribed in section 11B. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order in appeal dated 22.10.2011 passed by Commissioner (A) Indore regarding SSI Exemption availed by a cooperative sugar unit for the crushing season of 2000-01 and 2001-02.
- Availing Cenvat Credit on capital goods affecting SSI Exemption eligibility.
- Rejection of refund claim by original adjudicating authority and Commissioner (A).
- Request to decide both appeals on merits.
- Connected issues in Appeal no. E/79/12 and E/256/2012.

Analysis:
1. The appellant, a cooperative sugar unit, filed an appeal against the order in appeal dated 22.10.2011 passed by the Commissioner (A) Indore regarding the SSI Exemption availed during the crushing season of 2000-01 and 2001-02. The appellant cleared white and brown sugar under nil rate of duty availing SSI Exemption number 08/03-CE dated 01.03.2003, which prohibits availing Cenvat Credit on capital goods as per condition no. 2 of the notification. However, the Department observed that the appellant had availed Cenvat Credit on capital goods, leading to a dispute.

2. The appellant initially availed Cenvat Credit on capital goods amounting to ?15,317 but later reversed the credit. The Tribunal referred to a Supreme Court decision stating that once the credit availed has been reversed, it is considered as not availed ab initio. Consequently, the appellant became eligible for the SSI benefit under notification no. 8/03.

3. Two appeals arose from the same issue: Appeal no. E/79/12 sought a refund of ?15,317 which was rejected along with a refund of ?53,702. The second appeal, E/256/2012, challenged the rejection of the refund. The Tribunal decided to address both appeals through a common order due to their connection and the same impugned order.

4. The rejection of the refund claim amounting to ?53,702 was based on the appellant not being entitled to the SSI benefit. However, in light of the appellant now being eligible for the SSI benefit after reversing the Cenvat Credit on capital goods, the Tribunal deemed the refund admissible on merits, subject to fulfilling all conditions prescribed in section 11B.

5. Ultimately, the Tribunal allowed both appeals, concluding that the appellant would be entitled to the SSI benefit under notification no. 8/03 and the refund of ?53,702 would be payable, provided all conditions under section 11B are met.