2017 (5) TMI 649 - AT - Central Excise

Benefit of N/N. 30/2004-CE - benefit available provided the assessee has not availed CENVAT credit of the duty paid on inputs under the CENVAT Credit Rules 2002/2004 - denial on the ground that respondent had availed CENVAT credit on the common inputs which are used for the manufacture of textile and textile articles - Held that - there is no dispute that the respondent had reversed the CENVAT credit attributable to the inputs which are consumed in the manufacture of final goods which are cleared by availing benefit of N/N. 30/2004-CE. The said N/N. 30/2004-CE only states about non-availment of the CENVAT credit of the duty paid on inputs. Reversal of credit subsequently by the respondent is accepted and such reversal of credit is held as satisfying the conditions of the notification by the Tribunal in the case of Omkar Textile Mills Pvt Ltd 2013 (10) TMI 1298 - CESTAT AHMEDABAD - benefit available - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the respondent is eligible for exemption under Notification No.30/2004-CE dated 09/07/2004 due to availing CENVAT credit on common inputs used for manufacturing textile and textile articles.

Analysis:
The appeal by Revenue challenges the Order-in-Appeal passed by the Commissioner of Central Excise & Customs (Appeals), Nagpur, regarding the eligibility of the respondent for exemption under Notification No.30/2004-CE. The dispute revolves around the condition of not availing CENVAT credit on inputs, which the respondent had initially availed but later reversed. The Revenue contended that the reversal of credit does not fulfill the notification's conditions, citing strict construction of exemption notifications. However, the first appellate authority set aside the demands, relying on precedents and circulars supporting credit reversal even at the appeal stage.

The Tribunal analyzed the case, emphasizing that the respondent's reversal of CENVAT credit related to inputs used in goods cleared under the said notification. Referring to precedents like the case of Omkar Textile Mills Pvt Ltd, the Tribunal upheld that the reversal of credit met the notification's conditions. The Tribunal detailed the Gujarat High Court's orders and circulars supporting the reversal of credit even post-clearance of goods, establishing the admissibility of the benefit under Notification No.30/2004-CE. The Tribunal also addressed the quantification of credit reversal, highlighting discrepancies in the Revenue's calculations and concluding that the reversal was correctly done by the appellants.

Furthermore, the Tribunal considered the issue from another angle by examining whether the payment of 6% of the value of finished goods under Rule 6 of the CENVAT Credit Rules would signify non-availing of credit, thus meeting the notification's condition. Citing the case of Spentex Industries Ltd, the Tribunal affirmed that such payment made the assessee eligible for the exemption. The Tribunal emphasized the applicability of sub-rule (3D) of Rule 6 and set aside the original authority's decision for not considering this provision.

In conclusion, the Tribunal rejected the Revenue's appeal, citing the binding precedents and the factual distinctions from previous cases like Cheviot Company Ltd. The decision was pronounced on 10/04/2017, affirming the respondent's eligibility for exemption under Notification No.30/2004-CE.