2023 (5) TMI 134 - AT - Central Excise

Reversal of credit and payment of interest - adjustment from the payment of Rs. 2 lacs already made by the appellant - adjustment Partial exemption under notification no. 5/2006-CE dated 01.03.2006 - ceramic roller on which the credit was availed is an input used in the manufacture of capital goods i.e. kiln - violation of condition no.7 of the notification No.5/2006-CE dated 01.03.2006 - HELD THAT - The Tribunal/Court in HELLO MINERALS WATER (P) LTD. VERSUS UNION OF INDIA 2004 (7) TMI 98 - ALLAHABAD HIGH COURT and COMMISSIONER OF CENTRAL EXCISE VERSUS ASHIMA DYECOT LTD. 2008 (9) TMI 87 - HIGH COURT GUJARAT held that even if the assessee agreeing to reverse the cenvat credit availed at the stage of appeal before the tribunal, then also the condition of the notification which prescribes that no cenvat credit should be availed on the input will stand complied with accordingly, this case can be decided on the submission of the appellant that they are prepared for payment of cenvat credit along with interest and the same can be adjusted against the amount of cenvat credit and interest thereon. And if it is found that the amount of cenvat credit availed by the appellant along with interest is adjusted within the amount of Rs. 2 lacs paid by the appellant then the case can be decided on that basis. The matter remanded to the adjudicating authority for passing afresh - appeal allowed by way of remand.

Summary

Issues:
The case involves the availing of cenvat credit on ceramic roller used in the manufacture of capital goods and its impact on the eligibility for partial exemption under notification no. 5/2006-CE dated 01.03.2006.

Summary:
The appellant, engaged in manufacturing ceramic glazed tiles, availed cenvat credit on ceramic roller treating it as a capital good. The central excise officers found that the appellant had availed cenvat credit on the ceramic roller, which was intended for use as a capital good in the manufacture of excisable goods. The department contended that this violated condition no. 7 of notification No. 5/2006-CE, leading to a demand for differential excise duty and penalties. The appellant argued that the ceramic roller was part of the capital goods and not directly used in manufacturing ceramic tiles, therefore not violating the notification.

The appellant further submitted that they had deposited an amount equal to the cenvat credit availed, which could be adjusted against the credit. Citing various judgments, the appellant contended that the reversal of cenvat credit at the appeal stage would comply with the notification's conditions. The revenue authority reiterated the findings of the impugned order.

The Tribunal found that the case could be resolved without delving into the merits, as the reversal of credit and payment of interest could be adjusted from the amount already deposited by the appellant. Referring to previous judgments, the Tribunal noted that agreeing to reverse the credit at the appeal stage would satisfy the notification's condition. Therefore, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision based on the appellant's submission to adjust the cenvat credit and interest against the amount already paid.

This decision was pronounced in the open court on 02.05.2023.