2018 (9) TMI 891 - AT - Central Excise

Benefit of N/N. 4/2006-CE dated 01.03.2006 - contention of the Ld. Consultant that exemption referred to by the Revenue ie., Sl.No. 90 of the Notification No. 4/2006-CE dated 01.03.2006 as amended is subject to satisfaction of condition No.10 and therefore, is not an absolute Exemption Notification rather a conditional Exemption Notification - Held that - A bare reading of Sl.No. 90 of the Notification, it is found that the same is controlled by the condition No. 10. While the rate of duty on the goods described at Sl.No. 90 are nil ie., exempted, the goods at Sl.No. 91 are taxed at 4%; Sl.No. 90 is controlled by condition No. 10 whereas Sl.No. 91 is controlled by condition No. 11. The first condition is that the exemption is available for the clearance of first 3500 MTs and the second condition is that the exemption is not applicable to a manufacturer who avails exemption under Notification No. 8/2003-CE dated 01.03.2003. The nil rate of tax is therefore available subject to the satisfaction of both the above conditions - appeal allowed. Principles of natural justice - Department is aggrieved by the orders of the Commissioner to the extent that there was no findings with regard to the proposition made in the SCN to the demand of Cenvat credit of the balance amount of ₹ 28,27,645/- and ₹ 17,81,500/- Which was lapsed on 31.03.2010 - other grievance of the Revenue is that there is no finding given by the Commissioner for invoking Section 11 AC of the CEA - Held that - The Ld. Commissioner has clearly observed that the assesse has to necessarily pay an amount equivalent to the credit availed on inputs, inputs in the process of manufacture and inputs in the final products lying in stock either by deducting the amount from the balance available in their books of accounts and, if there is no sufficient balance, then, by way of cash payment. With regard to the balance credit available in the appellant s books after such reversing as on 31.03.2010, if any, is lapsed. The above finding is clearly on the demand of Cenvat credit on the balance of ₹ 28,27,645/- and ₹ 17,81,500/-as on 31.03.2010 - there is no valid reason in this ground of the departmental appeal - appeal of Revenue dismissed. Penalty under Rule 15 of CCR read with Section 11 AC of the CEA - Held that - The assesses appeals is allowed by setting aside the demand with consequential reliefs and therefore, the very levy of penalty is set aside. Appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Exemption under Notification No. 4/2006-CE for first clearances of Kraft paper.
2. Eligibility for Cenvat credit on inputs and final products.
3. Demand of duty payment during exemption period.
4. Penalty under Rules 25 & 26 of CER, 2002.
5. Demand of Cenvat credit balance lapsed on 31.03.2010.
6. Invocation of Section 11 AC of the CEA.

Issue 1: Exemption under Notification No. 4/2006-CE for first clearances of Kraft paper:
The assessees appealed against the Commissioner's orders dated 06.09.2012 regarding the failure to avail mandatory exemption for the first clearances of Kraft paper. The contention was that the exemption under Sl.No. 90 of Notification No. 4/2006-CE is conditional, subject to satisfaction of condition No.10, and not absolute. The Ld. Consultant argued that the exemption is not applicable to the assessee's case as it is conditional. The Tribunal referred to various judgments and concluded that the demand raised by the Revenue was not sustainable, setting aside the findings of the Commissioner disallowing Cenvat credit.

Issue 2: Eligibility for Cenvat credit on inputs and final products:
The assessees were found ineligible for Cenvat credit on inputs, inputs in process, and inputs in final products lying in stock as on 01.04.2010. The Ld. Commissioner observed that the assessees must pay an amount equivalent to the credit availed on inputs, and any balance credit lapsed on 31.03.2010. The Tribunal upheld the Commissioner's decision on this matter, dismissing the department's appeal.

Issue 3: Demand of duty payment during exemption period:
The Revenue demanded duty payment of ?30,52,684 paid by the assessee during the exemption period, considering it as non-duty liable to be demanded and appropriated to the Central Govt. under Section 11 D (1A) of the Act. The Tribunal found the demand raised by the Commissioner to be wrong and set aside the findings disallowing Cenvat credit, allowing the assessee's appeals with consequential reliefs.

Issue 4: Penalty under Rules 25 & 26 of CER, 2002:
The penalty under Rules 25 & 26 of CER, 2002 was dropped by the Commissioner. The Ld. Commissioner imposed a penalty under Rule 15 of CCR read with Section 11 AC of the CEA. However, the Tribunal set aside the penalty levy along with the demand, dismissing the department's appeals.

Issue 5: Demand of Cenvat credit balance lapsed on 31.03.2010:
The department appealed against the Commissioner's orders regarding the demand of Cenvat credit balance lapsed on 31.03.2010. The Tribunal found the Commissioner's decision on this matter to be valid, dismissing the department's appeal.

Issue 6: Invocation of Section 11 AC of the CEA:
The department raised concerns about the lack of findings by the Commissioner on invoking Section 11 AC of the CEA. The Tribunal found no merit in the department's grounds, dismissing both appeals filed by the department and allowing the appeals filed by the assessees.

This detailed analysis of the judgment covers all the issues involved comprehensively, providing insights into the legal arguments, findings, and conclusions reached by the Tribunal.