2013 (7) TMI 372 - AT - Central Excise

Availment of the Notification No. 30/2004-CE or Notification No. 29/2004-CE simultaneously - manufacture and clearance of yarn (textile) - when the assessee have not availed input duty credit, whether they have option to avail the Notification No. 29/2004-CE where the rate of duty is 4%. Held that - Exemption Notification No. 29/2004-CE - an unconditional exemption which prescribes a rate of duty of 4% advelorum. There is no condition in this notification that for availing of this exemption prescribing concessional rate of duty of 4% adv., input duty Cenvat Credit must be availed. The condition of non-availment of input duty Cenvat Credit is for nil duty under Notification No. 30/2004-CE. But this does not mean that an assessee not availing input duty credit can not avail the exemption under Notification No. 29/2004-CE, as this is an unconditional Notification - When an assessee does not avail of input duty credit, he has option to pay 4% duty under Notification No. 29/2004-CE and also the option to clear goods at nil rate of duty under Notification No. 30/2004-CE - When two exemption Notifications are available to an assessee, he can opt for the Notification most beneficial for him - Department can not force the assessee to avail a particular exemption Notification. - Decided in favor of Assessee. Stay on Pre-deposit . Held that - Assessee have a strong prima facie case in their favour. Hence the requirement of pre-deposit of Cenvat Credit demand, interest thereon and penalty is waived Stay application allowed. - Decided in favor of Assessee.

Summary

Issues:
Interpretation of exemption Notifications No. 29/2004-CE and No. 30/2004-CE; Availment of Cenvat Credit on capital goods; Treatment of duty payment under different notifications; Eligibility of capital goods Cenvat Credit; Prima facie case for waiver of pre-deposit.

Analysis:

The case involved a dispute regarding the appellant, a yarn manufacturer, availing Cenvat Credit on capital goods during a specific period when they were also benefiting from two exemption notifications, namely No. 29/2004-CE and No. 30/2004-CE. The Department contended that since the appellant did not avail input duty credit and chose to pay duty under Notification No. 29/2004-CE for clearances meant for export, the duty payment should be treated as a deposit, and the goods should be considered exempted under Notification No. 30/2004-CE, leading to the denial of Cenvat Credit on capital goods.

The appellant argued that under Notification No. 29/2004-CE, which prescribed a 4% duty rate without conditions, they were not obligated to avail input duty credit. They maintained that the goods cleared under this notification should not be treated as exempted under Notification No. 30/2004-CE. The appellant contended that since they did not exclusively use the capital goods for exempted goods, Rule 6(4) of Cenvat Credit Rules, 2004 should not apply, and they should be eligible for capital goods Cenvat Credit.

Upon review, the tribunal found that the appellant had not availed input duty credit during the disputed period for clearances made under both notifications. The tribunal disagreed with the Department's stance that the appellant had to opt for full duty exemption under Notification No. 30/2004-CE once eligible, stating that the appellant had the discretion to choose the more beneficial option between the two notifications. Consequently, the tribunal held that the appellant had a strong prima facie case in their favor and waived the pre-deposit requirement for the Cenvat Credit demand, interest, and penalty. The recovery of the amounts was stayed pending the disposal of the appeals.

In conclusion, the tribunal ruled in favor of the appellant, emphasizing their right to choose the applicable exemption notification based on their circumstances and benefit from the more advantageous option without being compelled by the Department's interpretation.