2017 (3) TMI 1123 - AT - Central Excise

SSI exemption - CENVAT credit - whether the appellant opting for availment of SSI Exemption on 1ST April, 2006 is liable to reverse any cenvat credit under the admitted fact that there was nil credit or balance in the Cenvat credit account? - Held that - Rule 11 (2) of CCR, 2004, requires reversal of only unutilized amount of credit lying, if any on the date of opting for SSI Exemption Scheme. The Rule provides for calculation of such amount of Cenvat credit in respect of inputs lying in stock on the date when such option is exercised and after deducting the said amount, the balance, if any, lying in his credit still shall lapse and shall not be allowed to be utilized - the appellant had nil balance in their Cenvat credit account no amount was required to be reversed - appeal allowed - decided in favor of assessee.

Summary

Issues:
Whether the appellant is liable to reverse any cenvat credit under the SSI Exemption Scheme opted on 1st April, 2006.

Analysis:
The appellant, a manufacturer of Welding electrodes and Iron Scrap, opted for the SSI Exemption Scheme on 1st April, 2006. The issue revolved around the non-reversal of Cenvat credit amounting to &8377; 2,42,217/- BED & &8377; 4,846/- Education Cess related to inputs in stock and goods in process on the date of opting for the exemption. The Commissioner (Appeals) upheld the demand for reversing the Cenvat credit as per Rule 11 (2) of Cenvat Credit Rules, 2004. The appellant contested this decision, arguing that as they had a nil balance in their Cenvat credit account, no amount needed to be reversed.

Upon examining Rule 11 (2) of the Cenvat Credit Rules, 2004, it was found that the rule mandates the reversal of only unutilized credit on the date of opting for the SSI Exemption Scheme. As the appellant had a nil balance in their Cenvat credit account, no amount was required to be reversed. The Tribunal agreed with the appellant's interpretation of the rule and allowed the appeal, setting aside the impugned order. The appellant was granted consequential benefits as per the law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that Rule 11 (2) of the Cenvat Credit Rules, 2004, only requires the reversal of unutilized credit on the date of opting for the SSI Exemption Scheme. Since the appellant had no balance in their Cenvat credit account, there was no obligation to reverse any amount. The decision allowed the appellant to avail consequential benefits in accordance with the law.