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2017 (11) TMI 604 - AT - Central ExciseCENVAT credit - exempt final products - whether on payment of duty on exempt goods, the assessee is further required to reverse the credit? - Held that - the First Appellate Authority s view as to discharge of duty liability on the finished goods which are exempted, cannot be considered as reversal of Cenvat credit is contrary to the law settled by the judgment of Hon ble High Court of Bombay in the case of Ajinkiya Enterprises 2012 (7) TMI 141 - BOMBAY HIGH COURT , where it was held that the assessee paid duty on decoiled HR/CR coils knowing fully well that the same were not manufactured goods. If duty on decoiled HR/CR coils was paid bona fide, then availing credit of duty paid on HR/CR coils cannot be faulted - appeal allowed - decided in favor of appellant.
Issues:
Appeal against Order-in-Appeal No.335/2007 dated 26/11/2007 regarding availing ineligible Cenvat credit on inputs used for manufacturing exempted goods cleared on payment of duty from April, 2001 to June, 2001. Analysis: The appeal was heard despite the absence of the appellant due to the narrow issue scope and remand by the High Court. The lower Authorities found the appellant availed ineligible Cenvat credit on inputs for exempted goods, leading to duty liability. The Tribunal had initially ruled in favor of the appellant, but the High Court remanded the matter back, highlighting points raised by the revenue. The Departmental Representative argued that the appellant wrongly availed Cenvat credit on inputs for exempted goods, citing a Tribunal decision. However, the Tribunal found the First Appellate Authority's view on discharging duty liability for exempted goods as contrary to settled law per the High Court of Bombay's judgment in Ajinkiya Enterprises. The Tribunal referenced the High Court's judgment to support its decision, emphasizing that the duty on final products was accepted by the department, allowing the CENVAT credit availed to stand even if the activity did not amount to manufacturing. The Tribunal concluded that the impugned order was unsustainable based on the settled law and set it aside, allowing the appeal. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order based on the High Court's precedent, thereby allowing the appeal against the Order-in-Appeal No.335/2007.
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