2020 (5) TMI 95 - AT - Central Excise

CENVAT Credit - exempt goods - denial of CENVAT Credit on capital goods on the ground that the amendment to Rule 6(4) does not have retrospective effect - HELD THAT - As per the submissions made by Appellant before the Adjudicating Authority, they have paid duty in the month of April 2017 and June 2017. The Adjudicating Authority has decided on the interpretation of amendment and no verification was done as regards the payment of duty. If on verification if it is found that appellant have cleared goods on payment of duty, from the date of taking credit they will be entitled for Cenvat credit, subject to condition that dutiable goods should be cleared within two years from the date of commencement of production of goods or installation of such capital goods, as the case may be. The matter is remanded to the Adjudicating Authority to decide the matter afresh - Appeal allowed by way of remand.

Summary

Issues:
- Availing Cenvat credit on capital goods used in the manufacture of exempted goods.
- Interpretation of Notification No. 13/2016-CE (NT) dated 01.03.2016.
- Retrospective effect of Rule 6(4) of Cenvat Credit Rules.

Analysis:
1. The appellant, engaged in manufacturing textile articles, availed exemption under Notification No. 30/2004-CE but faced denial of Cenvat credit on capital goods exclusively used in manufacturing exempted goods. The lower authorities rejected exemption citing Notification No. 13/2016-CE (NT) and non-retrospective application. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

2. The appellant conceded disallowance of Cenvat credit for a specific period but contested for subsequent years. The learned Counsel argued that payment of duty on cleared goods within two years of taking credit entitles them to Cenvat credit on capital goods. He relied on Rule 6(4) and a Tribunal decision for retrospective application.

3. The Revenue's Assistant Commissioner reiterated the impugned order's findings, opposing the appellant's claim for Cenvat credit on capital goods. The Tribunal, after hearing both sides, noted the denial of credit based on non-retrospective amendment interpretation. They emphasized the need for verification regarding duty payment and referenced a previous case for credit eligibility based on duty payment within two years.

4. The Tribunal remanded the matter to the Adjudicating Authority for a fresh decision, allowing the appeal by remand. The decision highlighted the importance of verifying duty payment within the stipulated period for determining Cenvat credit eligibility on capital goods used in manufacturing processes involving exempted goods.