2023 (7) TMI 48 - AT - Central Excise

CENVAT Credit - inputs i.e. sugar and input services viz manpower supply agency services and other common services - benefit of effective rate of duty of 1% was not available to them and they should have paid duty at the effective rate of 5% as per Sl. No. 11 of Notification No. 2/2011-CE dated 1.3.2011 under Chapter Sub Heading 2202 9020 - HELD THAT - This is a case in which the appellant had opted for benefit of exemption under Notification No. 1/2011-CE dated 1.3.2011 to discharge duty at 1% - It is found that, in the year 2011, vide Union Budget, the earlier exemption granted to fruit pulp or fruit juice-based drinks was withdrawn and the said goods were subject to duty at the following concessional rates exercisable at the option of the assessee. (a) @1% vide Notification No. 01/2011-CE dated 1.3.2011 subject to condition that no CENVAT credit was taken on the inputs / input services used to manufacture the said goods. (b) @5% vide Notification No. 02/2011-CE dated 1.3.2011 with no restriction as to availment of CENVAT credit on inputs or input services. Although the appellant had opted to pay duty on fruit pulp or fruit juice based drinks at 1% under Notification No. 1/2011-CE, they had initially availed CENVAT credit. However, they have on their own reversed Rs.42,00,866/- being the proportionate CENVAT credit availed on the inputs and input services on dutiable aerated waters and beverages and exempted fruit pulp or fruit juice based drinks. This has been confirmed in the Range Officers verification report dated 15/04/2013 - as per the decision of the Hon'ble Supreme Court in CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR 1995 (12) TMI 72 - SUPREME COURT , once the appellant has reversed the ineligible credit, the claim for exemption of duty on the disputed goods cannot be denied and they are hence eligible to discharge duty at 1% as per Notification 1/2011-CE. The appellant was eligible for payment of effective rate of duty of 1% on the fruit pulp or fruit juice based drinks cleared by them, during the impugned period, by availing exemption under Notification No. 1/2011-CE dated 1.3.2011 - the issue relating to interest and penalty does not survive - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the availment of CENVAT credit on inputs and input services while claiming a concessional rate of duty under Notification No. 1/2011-CE dated 1.3.2011 for 'fruit pulp or fruit juice based drinks', and the subsequent denial of the concessional rate by the Commissioner of Central Excise, Puducherry.

Comprehensive Details:

Issue 1: Availment of CENVAT credit and denial of concessional rate:
The appellant, M/s. Pepsico India Holding Pvt. Ltd., appealed against the Order in Original passed by the Commissioner of Central Excise, Puducherry, which denied them the benefit of the effective rate of duty of 1% under Notification No. 1/2011-CE dated 1.3.2011 for 'fruit pulp or fruit juice based drinks'. The appellant had cleared these goods at the 1% duty rate but had availed CENVAT credit on inputs and input services, which led to the Commissioner proposing duty payment at the effective rate of 5%. The appellant argued that they had reversed the CENVAT credit amount and complied with the notification conditions, making them eligible for the concessional rate. They cited relevant case laws and the Tribunal judgment in support of their contention.

Issue 2: Tribunal's Decision and Legal Precedents:
The Tribunal, after considering the facts and legal arguments presented, found in favor of the appellant. They noted that the appellant had reversed the CENVAT credit availed on inputs and input services related to the disputed goods, as per the Range Officer's verification report. The Tribunal referred to the Supreme Court's decision in Chandrapur Magnets Pvt. Ltd. case, emphasizing that once the ineligible credit is reversed, the claim for exemption of duty cannot be denied. They also cited the Tribunal's decision in Jai Beverage Pvt. Ltd. case, supporting the appellant's eligibility for the concessional rate under Notification No. 1/2011-CE. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief to the appellant.

Separate Judgement:
The judgment was delivered by Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) and Hon'ble Shri M. Ajit Kumar, Member (Technical) of the Appellate Tribunal CESTAT CHENNAI.

This summary provides a detailed overview of the issues involved in the legal judgment, the arguments presented by the parties, the Tribunal's decision, and the legal precedents cited during the proceedings.