2022 (2) TMI 895 - AT - Central Excise

Benefit of SSI Exemption Notification no.08-03-CE dated 1.3.2003 - allegation is that the appellant has taken Cenvat credit before crossing limit of ₹ 150 lacs - HELD THAT - There is no worksheet filed by the authorities while issuing show cause notice and there is no such allegation that the appellant has reversed less credit. Moreover, from the balance sheets and ER-3 returns, it is very much clear that at the end of financial year, the credit lying in cenvat account is having a nil balance. Same is evident from the ER-3 returns for the next financial year showing opening balance of Cenvat credit at nil. In that circumstance, the allegations made by the ld.AR during the course of argument, are not acceptable at this stage. The said calculation arrived by the ld.AR during arguments are based on record provided by the appellant during investigation but the show cause notice has not discussed any such discrepancy. Therefore, the argument of the ld.AR is only presumptive which is not required to be considered. The benefit of Notification No. 08/2003-CE dated 01.03.2003, the appellant has to fulfil the two conditions - (a) the appellant has taken Cenvat credit on inputs lying in work in progress after crossing the exemption limit of ₹ 150 lacs and (b) the appellant has reversed the credit lying in their Cenvat credit account on closing of the financial year which is evident from the balance sheet as well as ER-3 returns. which has been fulfilled by the appellant. The appellant is entitled to avail SSI exemption under Notification No. 08/2003-CE dated 01.03.2003 for the period 2013-14 to 30.6.2017 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of SSI Exemption Notification benefit under Notification no.08-03-CE dated 1.3.2003.

Detailed Analysis:

Issue 1: Denial of SSI Exemption Benefit
The appellant was denied the benefit of SSI Exemption Notification no.08-03-CE dated 1.3.2003 due to alleged wrong availment of Cenvat credit. The appellant, engaged in manufacturing pipe fittings and other goods, was investigated for availing Cenvat credit before crossing the clearance limit of ?150 lakhs as per the notification's conditions. The appellant failed to provide necessary documents and details, leading to a show cause notice denying the exemption and demanding differential duty. The appellant contended that they met the exemption conditions and provided evidence of not carrying forward credits, thus being eligible for the exemption.

Issue 2: Appellant's Arguments
The appellant argued that they met the exemption conditions by not carrying forward credits, thus fulfilling the requirements of the Notification no.08-03-CE dated 1.3.2003. They presented financial data to support their claim that they had paid the requisite duty, even exceeding the duty payable. The appellant emphasized that they had not availed credits before crossing the exemption limit and had reversed credits at the end of each financial year, as required by the notification.

Issue 3: Respondent's Opposition
The respondent opposed the appellant's claim, stating that the appellant had availed credits before reaching the exemption limit and had reversed credits only at the end of the financial year, not during the year as required. The respondent provided a chart to support their argument that the credits were reversed only at year-end, thus disqualifying the appellant from the exemption.

Judgment
After considering both parties' submissions, the Tribunal found that the appellant had indeed met the conditions of the Notification no.08-03-CE dated 1.3.2003. The appellant had not availed credits before crossing the exemption limit and had reversed credits at the end of each financial year, as evidenced by balance sheets and ER-3 returns. The Tribunal concluded that the appellant was entitled to the SSI exemption for the relevant period and set aside the order denying the benefit, allowing the appeal with consequential relief.

This judgment highlights the importance of complying with exemption conditions and providing accurate documentation to support claims, emphasizing the need for meticulous record-keeping and adherence to statutory requirements for availing tax benefits.