2018 (3) TMI 982 - AT - Central Excise

CENVAT credit - manufacture of herbal extracts, spices extracts, capsules and tablets which are known as food supplements - The department was of the view that the appellant was entitled to the benefit of N/N. 115/75-CE dated 30.4.1975 - Held that - it will not be correct to take the view that the appellant s industry falls within the categories of industries listed out in the Schedule to the Notification. The fact that solvent extraction is a process which is utilized within the factory cannot bring the factory within the purview of an industry such as oil mill and solvent extraction industry. So, prima facie, it appears to us that appellant may not be eligible for the N/N. 115/75 ibid during the disputed period. The CENVAT credit availed by the appellant already stands reversed at the time of making payment of duty on clearance of final products. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Appeal No.155/2007 and Order-in-Appeal No.09/2007 regarding CENVAT credit eligibility under Notification No.115/75-CE for herbal extracts, spices extracts, capsules, and tablets as food supplements.

Analysis:
The appellant, a manufacturer of food supplements, availed CENVAT credit on inputs and capital goods for duty payment on final products. Dispute arose for the period 13.5.2005 to 28.2.2006 due to an amendment in Section 5A of the Central Excise Act. The department contended the appellant was not entitled to CENVAT credit under Notification No.115/75-CE. Both appeals were heard together for final disposal.

The appellant argued that their products did not fall under the solvent extract industry as per the Notification. They maintained that once excise duty was paid, they should be allowed CENVAT credit, challenging the department's demand for credit reversal. The Revenue, however, claimed the appellant fell under the Notification's purview, hence not required to pay duty post-amendment to Section 5A.

After examining the records, the Tribunal found the appellant's industry did not align with the industries specified in the Notification. Despite utilizing solvent extraction processes, the appellant's factory did not fit the criteria for the exemption. The Tribunal noted the appellant had paid excise duty on goods clearance, resulting in automatic reversal of CENVAT credit, citing precedents like Bhushan Steel Ltd. and Commissioner vs. Narmada Chematur Pharmaceuticals Ltd.

Ultimately, the Tribunal set aside the impugned orders, allowing the appeals. It was concluded that the appellant, having paid excise duty on final products, was not required to reverse CENVAT credit again. The judgment was pronounced and dictated in open court on 07/02/2018.