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2022 (6) TMI 379 - HC - Central ExciseCENVAT Credit - capital goods procured and installed by the assessee for the purpose of manufacture of the said goods which are exempted from payment of duty - interpretation of Rule 6(4) of the CENVAT Credit Rules, 2004 - HELD THAT - On perusal of Rule 6(4) of CENVAT Credit Rules, 2004 which is absolutely clear that if capital goods are used for manufacture of dutiable goods within a period of two years from the date of commencement of commercial production or from the date of installation as per proviso, the same will be entitled for CENVAT Credit. It is relevant to consider that in light of Section 37 of the Act of 1944, the CENVAT Credit Rules, 2004, are framed with the beneficiary intention and to give exclusive effect of duty paid under the VAT regime of Taxation. The legislature in its wisdom has exclusively specified in Rule 6(4) of the CENVAT Credit Rules, 2004 that the credit upon capital goods will not only be debarred and restricted but also not allowed when the same are exclusively used for manufacture of exempted goods for a period of two years from the date of installation/commencement of production. In the case in hand, as per ER-1 return from the month of June- 2017, it is an admitted fact that the appellant had cleared the goods on payment of duty within period of two years. Further, the provisions of CENVAT Credit Rules, 2004 have to read in totality. On analysis of CENVAT Credit Rules, 2004 particularly Rule 6(6)(v) which are explanation to Rule 6(4), this court finds that in the year 2016-17 the goods were exported under bond. It is also true that in terms of Notification No.30/2004-CE dated 09.07.2004 option was exercised for exemption in the year 2016. The said fact does not debar the respondents from availing the credit. Provisions of Rule 6(4) read with Rule 6(6)(v) of the CENVAT Credit Rules, 2004 gives a time of two years to avail CENVAT Credit. This court finds that no Substantial Question of Law arises in the present matter - Appeal dismissed.
Issues:
1. Appeal filed by Revenue against CESTAT order allowing CENVAT credit on capital goods. 2. Interpretation of Rule 6(4) of CENVAT Credit Rules, 2004. 3. Admissibility of credit based on facts and circumstances. 4. Application of Rule 6(6)(v) of CENVAT Credit Rules, 2004. 5. Consideration of relevant judgments and legal provisions. Issue 1: The Revenue filed an appeal against the CESTAT order allowing CENVAT credit on capital goods used for manufacturing exempted goods. The dispute revolved around whether the capital goods, installed by the assessee for manufacturing exempted goods, were eligible for credit. The Adjudicating Authority initially ruled in favor of the assessee, but the Commissioner (Appeals) overturned this decision, citing the amended Rule 6(4) of the CENVAT Credit Rules, 2004. The CESTAT, however, upheld the assessee's appeal, emphasizing that the credit was admissible as the goods were cleared on payment of duty within the stipulated period. Issue 2: The interpretation of Rule 6(4) of the CENVAT Credit Rules, 2004 was a key aspect of the case. The rule stated that no CENVAT credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods for a period of two years. The court analyzed this rule in conjunction with the facts of the case, highlighting that the goods were cleared on payment of duty within the prescribed period. The court emphasized that the legislative intent behind such rules was to provide a benefit for duty paid under the taxation regime. Issue 3: The admissibility of credit based on the facts and circumstances was crucial. The court noted that the assessee had complied with filing returns and had cleared goods on payment of duty within the specified period. The court also considered Rule 6(6)(v) of the CENVAT Credit Rules, 2004, which clarified that goods exported under bond could not be treated as exempted goods. This aspect supported the admissibility of credit in the present case. Issue 4: The application of Rule 6(6)(v) of the CENVAT Credit Rules, 2004 played a significant role in determining the eligibility for credit. The court found that the goods were exported under bond, aligning with the provisions of the rule. Additionally, the court highlighted that the option for exemption exercised by the appellant did not preclude them from availing the credit within the stipulated time frame. Issue 5: The court extensively considered various judgments and legal provisions to support its decision. It referenced precedents where it was held that if capital goods were not exclusively used for exempted goods and were also utilized for the manufacture of exported goods, the CENVAT credit on such goods would be available. The court dismissed the appeal, emphasizing that no substantial question of law arose in the matter, in line with the principles outlined in the Steel Authority of India Ltd. case. In conclusion, the court dismissed the appeal, upholding the CESTAT's decision to allow the CENVAT credit on capital goods used by the assessee for manufacturing exempted goods within the prescribed period, based on a comprehensive analysis of the legal provisions, facts, and relevant judgments.
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