2018 (4) TMI 818 - AT - Central Excise

Concessional rate of duty - N/N. 1/2011 CE dated 01/03 /2011 - denial on the ground that the assessee availed credit of duty/ tax availed on inputs/ input services - principles of natural justice - Held that - The Original Authority only discussed the condition for availing the exemption under Notification No. 01/2011 without adverting to the statutory provision of Sub - Rule (3D) of Rule 6 which was strongly contended by the appellant. No analysis of such defense has been made by the Original Authority - Original Authority fell in error in not considering the legal provisions as contended by the appellant. Impugned order not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Entitlement of the appellant for concession under Notification No. 01/2011 CE regarding availing of credit on inputs and input services.

Analysis:
The appellant, engaged in the manufacture of fruit juice and mineral water, availed a concessional duty of one percent under Notification No. 01/2011 CE. The condition for this concession was that no credit of duty on inputs or Service Tax on input services should be availed by the assessee. The appellant maintained separate records for inputs and input services, ensuring no violation of this condition for the month of March 2011. Therefore, the denial of exemption for this period was deemed unjustified by the Tribunal.

For the period April 2011 to March 2013, the appellant continued to maintain separate records for inputs and input services. They reversed proportionate credit on input services attributable to the final products, as per Rule (3A) of CCR, 2004. The Tribunal noted that according to Sub-Rule (3D) of Rule 6, such payment under Sub-Rule 3 would be considered as non-availment of Cenvat Credit, making the appellant eligible for the exemption. The Tribunal found that the Original Authority erred in not considering this legal provision and set aside the impugned order.

The Tribunal directed the jurisdictional authority to verify the quantification for applying the provisions of Sub-Rule (3D) of CCR, 2004, to validate the appellant's assertions. With this liberty, the appeal was allowed, and the impugned order was deemed unsustainable due to the failure to consider the legal provisions raised by the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing their compliance with maintaining separate records for inputs and input services, which allowed them to avail the concessional duty under Notification No. 01/2011 CE. The Tribunal highlighted the importance of considering relevant legal provisions, such as Sub-Rule (3D) of Rule 6, in determining the eligibility for exemption, ultimately setting aside the Original Authority's decision and allowing the appeal.