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2018 (9) TMI 817 - AT - Central ExciseCENVAT Credit - Capital goods/inputs/input services - period March, 2006 to September, 2008 - denial of credit on the ground that they were availing benefit of N/N. 30/2004-CE - Extended period of Limitation - Held that - The lower authorities in the impugned order have accepted the fact that the CENVAT credit availed on inputs and input services by the appellant during the period in question has been reversed. To that extent, the appellant had followed the N/N. 30/2004-CE. Capital goods - Held that - Appellant had during the period in question, initially for two years manufactured goods i.e., Knitted Cotton Fabrics and cleared the same by availing the exemption under Notification No. 30/2004 - on an identical set of facts in the case of Commissioner of Central Excise, Chandigarh Vs. S.T. Cottex Exports Pvt. Ltd., 2011 (1) TMI 491 - PUNJAB & HARYANA HIGH COURT it was held in favour of assessee, holding that In the case in hand, also, the appellant had specifically informed the Range Superintendent on 18.11.2006 that they would be discharging duty liability on the finished goods i.e., Cotton Knitted Fabrics under Notification No. 29/2004 and also claiming exemption under Notification No. 30/2004 which would in turn mean that they had informed the authorities they intended to use the machines on which CENVAT credit on capital goods were availed for manufacturing of dutiable goods as well as exempted goods - credit remains allowed following the decision of S.T. Cottex Exports Pvt. Ltd. - penalty also set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
- Availment of CENVAT credit on capital goods under Notification No. 30/2004-CE - Eligibility to avail CENVAT credit on capital goods exclusively used for manufacturing exempted goods - Interpretation of Notification No. 30/2004-CE and Notification No. 29/2004-CE - Precedents set by Tribunal and High Courts on similar issues Analysis: Issue 1: Availment of CENVAT credit on capital goods under Notification No. 30/2004-CE The appeal challenged the Order-in-Original regarding the availment of CENVAT credit on capital goods during a specific period. The appellant, a manufacturer of Cotton Knitted dyed Fabric, had availed CENVAT credit on capital goods under Notification No. 30/2004-CE. The Revenue contended that the CENVAT credit availed was incorrect, invoking an extended period in the show cause notice. The Adjudicating Authority upheld the demands, leading to the appeal. Issue 2: Eligibility to avail CENVAT credit on capital goods exclusively used for manufacturing exempted goods The central issue revolved around whether the appellant, who initially manufactured goods exempted under Notification No. 30/2004-CE, was eligible to avail CENVAT credit on capital goods used for manufacturing such goods. The appellant argued that they had informed the authorities of their intention to use the machines for manufacturing both dutiable and exempted goods. The Tribunal analyzed precedents set by various courts to determine the eligibility criteria for availing CENVAT credit on capital goods used exclusively for exempted goods. Issue 3: Interpretation of Notification No. 30/2004-CE and Notification No. 29/2004-CE The Tribunal examined the provisions of Notification No. 30/2004-CE and Notification No. 29/2004-CE to ascertain the conditions for availing CENVAT credit on capital goods. The appellant's argument relied on the simultaneous applicability of both notifications and their compliance with duty payment on finished goods. The Tribunal compared these provisions with relevant judgments to establish the correct interpretation and application of the notifications in the appellant's case. Issue 4: Precedents set by Tribunal and High Courts on similar issues The Tribunal referenced judgments from S.T. Cottex Exports Pvt. Ltd. and other cases to support the appellant's claim regarding the eligibility to avail CENVAT credit on capital goods. The judgments highlighted the distinction between goods exempted subject to conditions and those fully exempted, emphasizing the appellant's compliance with duty payment on finished goods. By aligning with the decisions of the Hon'ble High Courts of Punjab & Haryana and Karnataka, the Tribunal concluded that the demands on CENVAT credit availed on capital goods were unsustainable and allowed the appeal. In conclusion, the Tribunal set aside the Order-in-Original, ruling in favor of the appellant based on the interpretation of relevant notifications and precedents established by higher courts. The decision emphasized the appellant's compliance with duty payment and the correct application of CENVAT credit rules on capital goods used for manufacturing both dutiable and exempted goods.
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