2017 (10) TMI 960 - AT - Central Excise

Benefit of N/N. 6/2002 dated 01/03/2002 - appellants availed credit of NCCD leviable on the inputs - Held that - Admittedly, availing credit of NCCD will debar the appellant from claiming exemption under notification 6/2002. Having realized the said position, the appellants fully reversed the credit amount of ₹ 1,01,632/- - the Hon ble Supreme Court in Chandrapur Magnet Wires Ltd. 1995 (12) TMI 72 - SUPREME COURT OF INDIA held that reversal of credit even subsequently should be construed as non-availment of such credit. The full reversal of credit by the appellant should satisfy the condition of non-availment of credit making them eligible for the exemption, if otherwise eligible on other grounds - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of credit of NCCD on inputs affecting eligibility for exemption under Notification 6/2002.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI involved an appeal against the order of the Commissioner of Central Excise (Appeals), Jaipur, regarding the eligibility of the appellants, engaged in manufacturing synthetic filament yarn of polyester, for exemption under Notification 6/2002. The key issue was the availment of credit of National Calamity Contingent Duty (NCCD) on inputs, which was introduced on 01/03/2003. The appellants had availed this credit, leading to a duty demand and penalty imposition by the Revenue, as it was argued that such credit debarred them from the exemption under the said notification.

The appellant argued that there was ambiguity regarding the availment of NCCD credit on inputs introduced in March 2003, and upon realizing the issue, they reversed the credit amount of &8377; 1,01,632. Citing legal precedents, including the decision of the Hon’ble Supreme Court and the Allahabad High Court, the appellant contended that the reversal of credit should be construed as non-availment, making them eligible for the exemption on the final product. The Tribunal acknowledged that the reversal of credit, even if done subsequently, should be considered as non-availment, following the legal precedents cited.

After hearing both parties and examining the case facts, the Tribunal found that the appellants, by fully reversing the credit, satisfied the condition of non-availment of credit, thereby making them eligible for the exemption under Notification 6/2002. The Tribunal also noted that the interest liability due to the delay in credit reversal could be adjusted from the pre-deposit made by the appellants. Consequently, the impugned order was set aside, and the appeal was allowed, granting the appellants the exemption under the notification, with consequential relief.