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2017 (11) TMI 145 - AT - Central ExciseBenefit of N/N. 3/2004-CE dt. 08/01/2004 - clearance of pipes - non-fulfillment of notification condition - Held that - the respondent had procured duty paid inputs for manufacturing of MS pipes. Respondent undisputedly supplied these pipes to the Government organisations by claiming the benefit of Notification No.3/2004 which has been denied as they have not produced essentiality certificate from the authorities as mentioned in the Notification but subsequently produced the certificate; hence the exemption has been correctly extended by the first appellate authority. Demand of CENVAT credit - Held that - when the appellant sought the benefit of Notification No.3/2004, he did not avail the CENVAT credit on the inputs which were utilised for manufacturing of the said MS pipes; subsequently when the demand of the duty liability was issued by the departmental officers by denying the benefit of the notification and during the course of investigation, they availed the CENVAT credit which was eligible for them and utilised the same for discharge of duty - the entire exercise is of non-eligibility to avail CENVAT credit is a non-est as an extending benefit of exemption of notification therein, no question of CENVAT credit on inputs, the same stance vindicated by the reversal of the amount by the assessee/respondent. Since the benefit of notification was correctly extended, the reversal of CENVAT credit in a form of payment of duty is correct, the question of demand of interest or imposition of penalties does not arise. Appeal dismissed - decided against Revenue.
Issues:
1. Eligibility for benefit of Notification No.3/2004-CE. 2. Availment of CENVAT credit on inputs. 3. Recovery of CENVAT credit. 4. Imposition of interest and penalties. Eligibility for benefit of Notification No.3/2004-CE: The case involved a dispute regarding the eligibility of the respondent for the benefit of Notification No.3/2004-CE. The show-cause notice raised concerns about the non-fulfillment of conditions under the notification. The adjudicating authority confirmed the demands raised, but the first appellate authority ruled in favor of the respondents, extending the benefit of the notification and setting aside interest and penalties. The Tribunal noted that the respondent later produced the essentiality certificate required by the notification, justifying the extension of the exemption by the first appellate authority. Availment of CENVAT credit on inputs: The main contention of the Revenue was the recovery of CENVAT credit availed by the respondent. The Revenue argued that the appellant could not claim CENVAT credit on inputs while seeking the benefit of the notification. The first appellate authority set aside the demand for CENVAT credit, stating that the appellant had not produced sufficient documents to prove the genuineness of the credit availed. However, the Tribunal found that the respondent had procured duty-paid inputs for manufacturing, and when the duty liability was issued, they availed the CENVAT credit, which was eligible and used for discharging the duty. The Tribunal supported the first appellate authority's decision, emphasizing that the non-eligibility to avail CENVAT credit was irrelevant due to the benefit of the notification. Recovery of CENVAT credit: The Tribunal upheld the decision of the first appellate authority regarding the recovery of CENVAT credit. It was established that the respondent did not avail the CENVAT credit initially when claiming the benefit of the notification. The reversal of CENVAT credit as payment of duty was deemed correct, and therefore, the demand for interest and penalties was set aside, as the benefit of the notification was correctly extended. Imposition of interest and penalties: The Tribunal concluded that since the benefit of the notification was rightfully extended, the reversal of CENVAT credit as payment of duty was appropriate. Consequently, the Tribunal rejected the appeals, affirming the decision of the first appellate authority. The issue of interest and penalties did not arise due to the correct extension of the benefit of Notification No.3/2004-CE.
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