2017 (9) TMI 612 - AT - Central Excise

CENVAT credit - sub Rule (3A) of Rule 6 of the Cenvat Credit Rules - validity of SCN - Held that - had appellant availed Cenvat credit attributable to both excisable goods as well as exempted goods then the question of examination for invocation of Sub-rule 2, 3 & 3A of said Rule 6 could have arisen. Since the appellant had availed such Cenvat credit which was attributable to excisable goods, the situation is covered by the Sub-rule (1) of Rule 6 of the CCR, 2004 - SCN s not valid - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004
2. Eligibility of availing Cenvat credit for excisable goods
3. Compliance with provisions of Cenvat Credit Rules
4. Adjudication of show cause notices
5. Appeal against Order-in-Appeal

Interpretation of Sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004:
The case involved a dispute regarding the interpretation of Sub-rule (3A) of Rule 6 of Cenvat Credit Rules, 2004. The appellant had opted for an option under this rule for the financial years 2012-13 and 2013-14. The Revenue contended that the appellant did not follow the entire procedure provided under this sub-rule, leading to the issuance of show cause notices proposing denial of Cenvat credit. The original authority upheld the denial, stating that the appellant did not comply with the procedure. However, the Tribunal analyzed the facts and found that the appellant availed Cenvat credit attributable to excisable goods, making them eligible under Sub-rule (1) of Rule 6. Consequently, the Tribunal held that the show cause notices were not sustainable, setting aside the Order-in-Appeal and Order-in-Original.

Eligibility of availing Cenvat credit for excisable goods:
The key issue revolved around the eligibility of the appellant to avail Cenvat credit for excisable goods manufactured by them. The appellant had availed Cenvat credit for the financial years 2012-13 and 2013-14, which was challenged by the Revenue through show cause notices. The Tribunal determined that the appellant had indeed availed Cenvat credit attributable to excisable goods, aligning with the provisions of Sub-rule (1) of Rule 6 of Cenvat Credit Rules, 2004. This analysis led to the conclusion that the appellant was entitled to the Cenvat credit for excisable goods, rendering the show cause notices unsustainable.

Compliance with provisions of Cenvat Credit Rules:
Another significant aspect of the case was the compliance of the appellant with the provisions of Cenvat Credit Rules. The Revenue alleged that the appellant did not follow the procedure and failed to maintain separate accounts as required under Sub-rule (3A) of Rule 6. The Commissioner (Appeals) upheld this contention, leading to the denial and recovery of Cenvat credit. However, the Tribunal disagreed, emphasizing that the appellant's availed credit was attributable to excisable goods, falling within the ambit of Sub-rule (1) of Rule 6. Consequently, the Tribunal ruled in favor of the appellant, setting aside the penalties imposed.

Adjudication of show cause notices:
The case involved the adjudication of show cause notices issued to the appellant for the financial years 2012-13 and 2013-14. The notices proposed the denial and recovery of Cenvat credit due to the appellant's alleged non-compliance with the provisions of Cenvat Credit Rules. While the original authority and the Commissioner (Appeals) upheld the denial, the Tribunal overturned their decisions based on a thorough analysis of the appellant's eligibility criteria under the relevant rules.

Appeal against Order-in-Appeal:
Lastly, the appellant challenged the Order-in-Appeal issued by the Commissioner, which upheld the denial and recovery of Cenvat credit. The Tribunal, after hearing the arguments from both parties and examining the facts of the case, allowed the appeal. The Tribunal held that the show cause notices were not sustainable, thereby setting aside the Order-in-Appeal and the Order-in-Original. The appellant was granted consequential relief as per the law.

This detailed analysis of the judgment highlights the critical issues, interpretations of relevant rules, compliance considerations, adjudication process, and the final outcome of the appeal before the Tribunal.