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2019 (7) TMI 823 - AT - Central ExciseCENVAT Credit - appellant have cleared the goods under exemption N/N. 30/2004-CE dated 09.07.2004 - case of the department is that, since the appellant have claimed Cenvat credit, they have violated the condition of N/N. 30/2004-CE dated 09.07.2004 which stipulates that no credit of such excise duty or additional duty of customs on inputs has been taken by the manufacturer of such goods - HELD THAT - Though the appellant have availed Cenvat credit in respect of inputs used in the manufacture of Polyester Texturised Yarn and cleared under nil rate of duty but it is also a fact that appellant have reversed the amount equal to 6% as provided under Rule 6(3) of Cenvat Credit Rules, 2004 - the provision of sub Rule (3D) was specifically provided under the statute to meet with the situation as existing in the present case. The appellant have reversed or paid the amount in terms of sub Rule (3) of Rule 6, therefore, as per sub Rule (3D), it will amount to not taking of Cenvat credit and when this be so, the condition of N/N. 30/2004-CE stands complied. The demand denying the exemption N/N. 30/2004- CE does not sustain - Appeal allowed - decided in favor of appellant.
Issues:
Violation of condition of exemption Notification No. 30/2004-CE due to claiming Cenvat credit on inputs used in manufacturing final products. Analysis: The case involved the appellants engaged in manufacturing Polyester Texturised Yarn under sub heading 54023300 of the Central Excise Tariff Act 1985. They cleared goods under exemption Notification 30/2004-CE but claimed Cenvat credit for inputs used. The department contended that claiming Cenvat credit violated the condition of the notification, leading to denial of exemption and imposition of penalty. The appellant argued that by reversing 6% amount as per Rule 6(3) of Cenvat Credit Rules, it amounted to non-availment of Cenvat credit as per sub rule (3D) of Rule 6. They cited various judgments to support their position, emphasizing compliance with the notification's conditions. The Revenue, represented by the Assistant Commissioner, reiterated that the notification's clear condition was not to avail Cenvat credit. They emphasized that any rule or notification would prevail over Cenvat Credit Rules, and strict interpretation should be applied. The Revenue also cited relevant judgments to support their stance. Upon careful consideration, the Tribunal noted that the appellant had reversed the amount as per Rule 6(3), which, under sub Rule (3D) of Rule 6, amounted to not taking Cenvat credit as required by the exemption notification. The Tribunal referenced a previous case where a similar issue was resolved in favor of the appellant based on the applicability of sub-rule (3D) of Rule 6. The Tribunal concluded that once the amount under Rule 6(3) was paid, the notification's condition was deemed complied with. Based on the precedent and interpretation of the relevant rules and notifications, the Tribunal set aside the demand denying the exemption under Notification No. 30/2004-CE. The impugned order was overturned, and the appeal was allowed, aligning with the decision in the previous case and the interpretation of the rules provided therein.
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