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2019 (1) TMI 1164 - AT - Central ExciseBenefit of N/N. 29/2004-CE and 30/2004-CE, both dated 09/07/2004 - intermediate product Polyester Tops which are captively consumed in the manufacture of final products viz., woollen/ blended fabrics - benefit of N/N. 67/95-CE dated 16/03/1995 - only allegation made in this regard for not extending the benefit of the said Sl.No.10 of the said Notification No.30/2004-CE, is that polyester tow falling under heading 5501 cannot be considered as polyester staple fibre - CENVAT Credit - Rule 6 of CCR - CBEC Circular dated 28.07.2004. Held that - On going through the notification No 30/2004, it is seen that there is a condition that Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002. The appellants submitted that they have reversed the credit before clearance and it was permissible in terms of the clarification issued by CBEC, vide circular No. 795/28/2004-CX., dated 28-7-2004. We find that it was clarified at issue No. 2 that If the manufacturer had not taken any credit on his pre-budget stock of inputs, he can clear the finished products without payment of duty under Notification No. 30/2004-C.E., dated 9-7-2004. The appellants submitted that they have been reversing credit taken at the time of clearance. We also find that as submitted by the appellants this bench has opined that reversal of credit taken and attributable to goods cleared by availing the benefit of the said Notification No. 30/2004, before clearance would satisfy the condition of nan availment of credit as per the Notification. When a further circular dated 1-2-2007 was issued the appellants started following the new procedure. Therefore, we do not find any infirmity in the procedure availed by the appellants and hold that the benefit of the Notification was correctly availed. The issue of eligibility of Notifications No. 29&30/2004 have been discussed at length by the Bombay High Court in the case of Raymond Ltd. 2009 (6) TMI 5 - BOMBAY HIGH COURT , where it was held that the term staple fibres at Sr. No.10 of Notification No. 30/04 applies to duty paid inputs falling under Heading 55.01 to 55.04 of the CET which are used in the manufacture of Tops (55.06 / 55.07) and the said term is not restricted to the inputs falling under Heading 55.03 / 55.04 only. - the appellant s contentions are correct and as they have procured duty paid tow, no duty is payable on the final products in view of the judgments cited. Benefit of N/N. 67/95 - Held that - There is no dispute that the intermediate product Polyester Top arising as an intermediate state is completely consumed captively and has not been cleared as such. Even after for the period 01.03.2007, as they have followed the requirement as contended in Rule 6(1) of CCR and also the Circular 01/02/2007 and as such, no credit was taken in respect of goods cleared under 30/2004 - the goods arising at the intermediate stage of manufacture by the appellants are squarely covered by Notification No. 67/95 and fall under the exclusion at No. (vi) as they have discharged the obligation in terms of Rule 6(1) of CCR - benefit of Notification No. 67/95 cannot be denied. The appellants are eligible for the exemption contained in Notification No. 30/2004 and therefore, the impugned order is not maintainable - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to benefits under Notifications No. 29/2004-CE and 30/2004-CE. 2. Entitlement to the benefit of Notification No. 67/95-CE. 3. Compliance with procedures under Rule 6 of the CENVAT Credit Rules (CCR) and CBEC Circular dated 28.07.2004. 4. Applicability of limitation period for the demand. Issue-wise Detailed Analysis: 1. Entitlement to Benefits under Notifications No. 29/2004-CE and 30/2004-CE: The appellants were engaged in the manufacture and clearance of woollen/blended fabrics and availed the benefits of Notifications No. 29/2004-CE and 30/2004-CE. The department contended that the appellants could not avail the benefits of both notifications simultaneously. However, the appellants argued that they reversed the CENVAT credit before the clearance of goods under Notification No. 30/2004-CE, as per the procedures prescribed by CBEC Circular dated 28/07/2004. The Tribunal found that the appellants' procedure of reversing the credit before clearance was permissible and satisfied the condition of non-availment of credit under Notification No. 30/2004-CE. The Tribunal also referred to the Bombay High Court's decision in the case of Raymond Ltd., which supported the appellants' contention that the term "staple fibres" in Notification No. 30/2004-CE includes inputs falling under Headings 55.01 to 55.04 used in the manufacture of Tops (55.06/55.07). Therefore, the appellants were entitled to the benefits of both notifications. 2. Entitlement to the Benefit of Notification No. 67/95-CE: The appellants contended that they were eligible for the benefit of Notification No. 67/95-CE as they had fulfilled the conditions prescribed, including the obligations under Rule 6 of the CENVAT Credit Rules. The Tribunal found that the intermediate product "Polyester Top" was captively consumed and not cleared as such. The appellants reversed the credit taken on inputs used for the manufacture of exempted products and followed the procedures prescribed by CBEC Circular dated 01/02/2007. Therefore, the benefit of Notification No. 67/95-CE could not be denied to the appellants. 3. Compliance with Procedures under Rule 6 of the CENVAT Credit Rules and CBEC Circular dated 28.07.2004: The appellants argued that they complied with the procedures under Rule 6 of the CENVAT Credit Rules by initially availing credit on all inputs and later reversing the credit attributable to exempted products before clearance. The Tribunal found that the appellants' procedure was in line with the CBEC Circular dated 28/07/2004, which allowed manufacturers to reverse the credit amount and avail full exemption on finished goods. The Tribunal also noted that the appellants started following the new procedure prescribed by CBEC Circular dated 01/02/2007. Therefore, the appellants had followed the procedures contained in Rule 6 of the CENVAT Credit Rules and the relevant CBEC Circulars. 4. Applicability of Limitation Period for the Demand: The appellants contended that a major portion of the demand for the period from July 2004 to June 2008 was hit by limitation, as mere failure to disclose the intermediate product "Polyester Tops" could not be categorized as willful suppression with intent to evade duty. The Tribunal referred to several judgments, including T. N. Housing Board Vs CCE and Pahwa Chemicals Pvt Ltd Vs CCE, which supported the appellants' contention that the extended period of limitation could not be invoked in the absence of willful suppression. Therefore, the demand for the period from July 2004 to June 2008 was not sustainable on the grounds of limitation. Conclusion: The Tribunal concluded that the appellants were entitled to the benefits of Notifications No. 29/2004-CE, 30/2004-CE, and 67/95-CE. The appellants had complied with the procedures under Rule 6 of the CENVAT Credit Rules and the relevant CBEC Circulars. The demand for the period from July 2004 to June 2008 was hit by limitation. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.
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