2017 (3) TMI 299 - AT - Central Excise

Availing cenvat credit while availing benefit of exemption N/N. 30/2004-CE dt. 09.07.2004 - denial on the ground that the appellant has taken credit on the inputs - Held that - it is an admitted fact that before clearances of the said goods availing benefit under N/N. 30/2004-CE dt. 09.07.2004, the appellant either reverses the Cenvat Credit attributable to the inputs used in manufacture of said goods or reverse the amount equivalent to 5%/6% of the value of the said goods. The reversal of Cenvat Credit on inputs used attributable to manufacture of said goods or reversal of amount equivalent to 5%/6% of the value of said goods shall amount to not taken the credit on inputs of the said goods - the appellant has complied with the condition of N/N. 30/2004-CE dt. 09.07.2004 - appellant has correctly availed the benefit of said Notification - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appellant denied benefit of Notification No.30/2004-CE for exempted goods due to availing Cenvat Credit.

Analysis:

The appellants filed appeals against orders denying the benefit of Notification No.30/2004-CE, which exempted Nylon Filament Yarn or Polyester Filament Yarn from duty payment. The appellant had availed Cenvat Credit at the time of input procurement but reversed the credit when claiming exemption for the final goods. The Revenue contended that since the appellant had taken credit on inputs, they were not entitled to the exemption under the said notification. Show Cause Notices were issued for various periods, demanding duty, interest, and penalties. The matter was adjudicated, denying the benefit of the notification, leading to the present appeals.

The main contention was whether the appellant complied with the conditions of Rule 6(3) of Cenvat Credit Rules, 2004, to be entitled to the benefit of Notification No.30/2004-CE. The appellant argued that they reversed the credit attributable to inputs used in manufacturing the exempted goods, fulfilling the conditions. They cited a previous case where a similar benefit was granted. On the other hand, the Revenue argued that since the appellant had taken Cenvat Credit on inputs, they were not eligible for the notification's benefit.

The Tribunal considered the submissions and noted that the appellant had indeed reversed the Cenvat Credit on inputs used in manufacturing the exempted goods or reversed an equivalent amount of the goods' value. Referring to a previous decision, the Tribunal concluded that such reversal of credit was equivalent to not taking the credit on inputs used for the goods. Therefore, the Tribunal held that the appellant had complied with the notification's conditions and correctly availed the benefit. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal found no merit in the Revenue's argument and ruled in favor of the appellant, allowing the appeals and granting relief as appropriate.