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2023 (1) TMI 882 - AT - Central ExciseCarry forward of Cenvat credit after the date of availment of exemption Notification No. 30/2004-CE dated 09.07.2004 - whether the said credit can be utilised for payment of duty - HELD THAT - The entire case of the department is that since the appellant have availed the exemption Notification No. 30/2004- CE dated 09.07.2004, they are not entitled to carry forward the accumulated Cenvat credit as on date of exemption Notification. Accordingly, the same was not eligible for utilisation for payment of duty. In the facts of the present case the notification No. 30/2004-CE is admittedly a conditional one. In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avail the absolute exemption notification. Therefore, in the present case exemption notification No. 30/2004-CE, being a conditional one, bar of lapsing of credit shall not apply. The issue was considered in the case of M/S PATODIA FILAMENTS PVT. LTD., SHIVKARAN CHOUDHARY VERSUS C.C.E. S.T., -VAPI (VICE-VERSA) 2019 (4) TMI 435 - CESTAT AHMEDABAD where it was held that In the present case all the conditions enumerated under sub rule 3 (i) has been followed by the Appellant and he is not required to reverse the entire credit lying in balance on the date of opting notification No. 30/2004 CE dated 09.07.2004. Therefore, the balance credit is not liable to be reversed. For the same reason the credit utilised by him for clearance of finished goods or capital goods. The issue is no longer res integra - Appeal allowed.
Issues Involved:
1. Entitlement to carry forward Cenvat credit after availing exemption Notification No. 30/2004-CE. 2. Utilization of said Cenvat credit for payment of duty. Issue-wise Detailed Analysis: 1. Entitlement to Carry Forward Cenvat Credit: The primary issue revolves around whether the appellant is entitled to carry forward the Cenvat credit after availing the exemption under Notification No. 30/2004-CE dated 09.07.2004. The Department contends that under Rule 11(3) of the Cenvat Credit Rules, 2004, if the appellant avails the exemption, the Cenvat credit on the stock as of the date of opting for the exemption shall lapse. The appellant argues that Rule 11(3) applies only to absolute exemptions and not to conditional exemptions like Notification No. 30/2004-CE. The Tribunal noted that Notification No. 30/2004-CE is a conditional notification, and therefore, the bar of lapsing of credit under Rule 11(3) does not apply. This position is supported by various judgments, including Patodia Filaments Pvt Ltd. vs. Commissioner, where it was held that the balance credit does not lapse if the exemption is conditional. 2. Utilization of Cenvat Credit for Payment of Duty: The second issue concerns the utilization of the Cenvat credit for the payment of duty. The appellant asserts that since the credit was rightly carried forward, its utilization for payment of duty is in order. The Tribunal agreed with this argument, stating that since the credit did not lapse, its utilization is valid. This is consistent with the Tribunal's findings in similar cases, such as Wearit Global Ltd. and Jansons Textile Processors, where it was held that credit utilized for the clearance of finished goods or capital goods is permissible if the exemption is conditional. Judicial Precedents: The Tribunal referenced several judgments to support its decision. In Patodia Filaments Pvt Ltd., it was concluded that the notification in question is conditional, and thus, the balance credit does not lapse. Similarly, in Union of India vs. Kanchan India Limited, the Rajasthan High Court held that Rule 11(3)(i) applies to conditional exemptions and does not mandate the lapsing of credit. The Tribunal also cited Sunfab Sales and Industries Ltd. vs. CCE & ST, where it was reiterated that the balance credit does not lapse under conditional exemptions. Conclusion: The Tribunal concluded that the appellant is entitled to carry forward the Cenvat credit after availing the conditional exemption under Notification No. 30/2004-CE. Consequently, the utilization of such credit for payment of duty is valid. The impugned orders were set aside, and the appeals were allowed. The Tribunal's decision aligns with established judicial precedents, confirming that the issue is no longer res integra.
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