2013 (7) TMI 214 - AT - Central Excise

Cenvat Credit - Exempted goods - Goods cleared under Notification 6/2002-CE dated 01/03/2003 under Chapter-X procedure Held that - The Tribunal as reported in 2005 (2) TMI 649 - CESTAT, MUMBAI has held that the impugned goods i.e. Diethyl Carbamyl Chloride cleared under Chapter-X procedure cannot be termed as exempted goods. Therefore, Cenvat credit cannot be denied and demanded from the Respondent. Decided against the Revenue.

Summary

Issues:
1. Whether goods cleared under Notification 6/2002-CE dated 01/03/2003 under Chapter-X procedure can be treated as exempted goods for denying cenvat credit to the Respondent under Rule 6 of the Cenvat Credit Rules.

Analysis:
The appeal was filed by the Revenue against the order passed by the Commissioner (A) Central Excise, Vadodara. The case revolved around M/s.Paushak Ltd., engaged in manufacturing chemicals falling under Chapter 28 & 29 of the Central Excise Tariff Act, 1985. The Respondents availed facilities under the Cenvat Credit Rules, 2002. The issue arose when it was found that the Respondent had manufactured and cleared DECC under Notification 6/2002-CE, claiming exemption subject to Chapter-X procedure. The Revenue contended that since DECC was cleared without payment of duty, cenvat credit on inputs used in its manufacture was not admissible. Show-cause notices were issued, confirmed by the adjudicating authority, imposing penalties and interest. The Commissioner (A) set aside the order, leading to the Revenue's appeal.

The Revenue argued that the Commissioner (A) misinterpreted the Central Excise Rules by holding that goods cleared under Chapter-X procedure cannot be considered exempted. They cited Rule 6(5) of the Cenvat Credit Rules, stating that only specific exceptions allow cenvat credit on exempted goods, which did not apply in this case. Therefore, they believed the Cenvat credit should be demanded from the Respondent. On the other hand, the Respondent's advocate referred to a previous Tribunal decision in their favor, stating that goods cleared under Chapter-X procedure should not be termed as exempted, thus justifying their entitlement to cenvat credit.

The crucial issue was whether goods cleared under Notification 6/2002-CE under Chapter-X procedure could be classified as exempted goods for denying cenvat credit to the Respondent under Rule 6 of the Cenvat Credit Rules. The Tribunal noted that in the Respondent's previous case involving the same goods, the Tribunal had ruled that goods cleared under Chapter-X procedure should not be considered exempted. Relying on this precedent, the Commissioner (A) rightfully allowed the appeal, leading the Tribunal to uphold the decision and reject the Revenue's appeal.