9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 772 - AT - Central ExciseCENVAT Credit - value based exemption availed - contention of the department is that since the appellant was availing value based exemption, therefore, the credit lying in balance as on 31/03/2010 would lapse in accordance with Rule 11(2) of CENVAT Credit Rules, 2004 - whether the appellant had correctly availed CENVAT Credit of ₹ 5,30,300/- lying in balance as on 31/03/2010 and also credit of ₹ 5,74,902/- availed during the Financial Year 2010-11? - Time limitation - Held that - As the appellant had been availing benefit of exemption Notification, which was value based, accordingly, the credit of ₹ 5,30,300/-, lying as on 31.3.2010 would lapse and is inadmissible to the appellant in the year 2010-11. In Clause- 2(d)(iii) of the Notification 08/2003, a specific condition has been prescribed that manufacturer cannot avail CENVAT Credit on inputs used in the manufacture of specified goods up to the aggregate value of first clearance not exceeding ₹ 150.00 Lakhs. Therefore, non-compliance of the same would result in inadmissibility of the credit, on the inputs even though the appellant had complied with the Rule 6(3) of CENVAT Credit Rules, 2004 - it is found that the department while denying the said credit adjusted the amount paid under Rule 6(3) of CENVAT Credit Rules. Thus, the appellant are not entitled to CENVAT Credit both the amounts i.e. ₹ 5,30,300/- and also 5,74,902/-. Time limitation - Held that - The department is fully aware of the fact that the appellants are availing benefit of SSI exemption Notification for clearance of the goods manufactured on their on behalf and also manufacturing branded goods for others. All these facts are reflected in their monthly Returns filed from time to time - Therefore, SCN issued on 09/9/2014 for recovery of the excess credit inadmissible availed in 2010-11 is barred by limitation. Appeal is allowed on the ground of limitation.
Issues:
- Correct availment of CENVAT Credit - Applicability of Rule 11(2) of CENVAT Credit Rules, 2004 - Compliance with SSI Exemption Notification - Limitation period for demand recovery Analysis: 1. Correct Availment of CENVAT Credit: The appellant availed CENVAT Credit of ?5,30,300/- as opening balance for the Financial Year 2010-11 and ?5,74,902/- during that year. The appellant claimed to have followed Rule 6(3) of CENVAT Credit Rules, 2004, by paying 5% value of exempted goods, thus justifying the credit availed. However, the Revenue argued that since the appellant opted for a value-based exemption, the credit from the previous year would lapse according to Rule 11(2) of the Rules. 2. Applicability of Rule 11(2) of CENVAT Credit Rules, 2004: Rule 11(2) states that if a manufacturer opts for exemption based on value or quantity of clearances and was availing CENVAT credit before such option, the credit on inputs lying in stock at the time of opting for exemption shall lapse. The Tribunal agreed with the Revenue that the appellant's credit balance from the previous year would lapse due to the value-based exemption they were availing. 3. Compliance with SSI Exemption Notification: The appellant argued that they complied with Rule 6(3) of CENVAT Credit Rules, 2004, and therefore should be allowed to retain the credit. However, Clause 2(d)(iii) of Notification 08/2003 specified conditions for availing credit on inputs used in manufacturing goods under the exemption. Non-compliance with this condition would render the credit inadmissible, even if Rule 6(3) was followed. 4. Limitation Period for Demand Recovery: The Tribunal considered the limitation period for the demand recovery. The appellant contended that the demand made in 2014 for excess credit availed in 2010-11 was time-barred since they had been transparent in their monthly returns, reflecting all relevant information. The Tribunal agreed that the demand was indeed barred by limitation, considering the appellant's compliance with reporting requirements. In conclusion, the Tribunal allowed the appeal on the ground of limitation, finding that the demand for recovery of excess credit availed in 2010-11 was time-barred. The judgment highlighted the importance of compliance with exemption conditions and reporting transparency in availing CENVAT credit under the relevant rules and notifications.
|
