2018 (2) TMI 1313 - AT - Central Excise

CENVAT credit - final products cleared for home consumption as well as for export without payment of duty - denial on the ground they had availed Cenvat credit on the capital goods which were exclusively used in the manufacture of exempted goods during the said period - Held that - it is fact on record that the appellant had also cleared the goods on payment of duty under N/N. 29/2004-CE with effect from 18.06.2005. Hence, there is no fault in the finding of the ld. Commissioner (Appeals) that capital goods were used for manufacture of exempted and duty paid goods. In the identical circumstances, in the appellant s own case 2011 (1) TMI 491 - PUNJAB & HARYANA HIGH COURT , the Hon ble Punjab & Haryana High Court has held that it cannot be said that the capital goods, in question, had been used exclusively for the manufacture of fully exempted finished products. Under sub-rule (4) of Rule 6 of Cenvat Credit Rules, 2004, capital goods cenvat credit is inadmissible only in respect of those capital goods which are exclusively used in the manufacture of exempted goods. Demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Disallowance of Cenvat credit on capital goods exclusively used in the manufacture of exempted goods.
2. Interpretation of Notification No. 30/2004-CE and Notification No. 29/2004-CE.
3. Admissibility of Cenvat credit under Rule 6(4) of Cenvat Credit Rules, 2004.

Analysis:
1. The case involved the disallowance of Cenvat credit on capital goods by the adjudicating authority due to their exclusive use in manufacturing exempted goods. The Commissioner (Appeals) allowed the appeal, leading to the Revenue's appeal. The Revenue contended that since the appellants were exclusively engaged in manufacturing exempted goods, Cenvat credit on capital goods should not be allowed. Various judgments were cited to support this argument.

2. The Respondent-Assessee argued that they started availing the benefit of Notification No. 29/2004-CE from a specific date, clearing goods both with and without duty payment. They relied on a judgment from the Hon'ble Punjab & Haryana High Court in a similar case where the Tribunal allowed Cenvat credit of capital goods. The Tribunal found that the appellants cleared goods both with and without duty payment, supporting the Commissioner (Appeals)'s finding that capital goods were used for both exempted and duty paid goods.

3. The Tribunal referred to the Hon'ble Punjab & Haryana High Court's judgment, emphasizing that the assessee availed the benefit of a notification requiring a 4% duty payment, indicating that capital goods were not exclusively used for exempted goods. The Tribunal concluded that the assessee could claim the benefit of Cenvat credit under Rule 6(4) as they did not exclusively use capital goods for exempted goods. Consequently, the Tribunal upheld the Commissioner (Appeals)'s order, dismissing the Revenue's appeal for lacking merit.