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2013 (12) TMI 80 - AT - Central ExciseDuty liability - Simultaneous benefit of Notification No.29/2004 and Notification No.30/2004 Taken benefit of CENVAT cannot be taken on duty paid on inputs -Whether subsequent reversal of proportionate CENVAT Credit at the end of the month in respect of the inputs used in manufacturing of final product cleared under Notification No.30/2004 would amount to a situation as if CENVAT Credit was not availed Held that - Relying upon Hello Minerals Water (P) Ltd. v. Union of India 2004 (7) TMI 98 - HIGH COURT OF JUDICATURE AT ALLAHABAD - Reversal of Modvat credit amounts to non-taking of credit on the input - the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunal s stage. There is reversal of CENVAT Credit, the question of discharge of duty liability does not arise, but the appellant is required to pay interest in accordance with the provisions of law on the amount reversed belatedly . In order to quantify the correct amount of interest liability on the appellant, he has not reversed the CENVAT Credit attributable to the inputs, the matter remanded back to the lower authorities for limited purpose of quantifying the amount of interest on the belated reversal of CENVAT Credit by the appellant, wherein they had reversed the CENVAT Credit not at the end of the month when the clearances took place, but subsequently - The penalties imposed are unwarranted and set aside Decided partly in favour of Assessee.
Issues:
Whether the appellant is liable to pay duty for the period July 2004 to December 2005 for availing benefits of Notification No.29/2004 and Notification No.30/2004 simultaneously. Analysis: The main issue in this case was whether the appellant was required to pay duty liability for a specific period due to availing benefits under two notifications simultaneously. The appellant had utilized CENVAT Credit of inputs for manufacturing final products under different notifications. The key contention was whether the reversal of CENVAT Credit by the appellant, albeit with delays up to 6 months, affected their eligibility for exemption. The Tribunal examined the appellant's compliance with Notification No.30/2004, which required not availing CENVAT benefit on inputs. The Tribunal noted that the appellant reversed the CENVAT Credit on inputs used for goods cleared under Notification No.30/2004, despite not maintaining separate accounts. The adjudicating authority initially concluded that the appellant was not eligible, citing the need for timely reversals. However, the Tribunal disagreed, referencing the judgment in the case of Ashima Dyecot Ltd. and the law established by the Supreme Court in the case of Chandrapur Magnet Wires. The Tribunal highlighted that the appellant's practice of monthly reversals aligned with the legal principles upheld in previous cases. The judgment emphasized the importance of following established legal precedents and rules, such as Rule 6(3) of the Cenvat Credit Rules, 2004, which allowed manufacturers not maintaining separate accounts to follow specific conditions. Additionally, the Tribunal referenced the Allahabad High Court's decision in the case of Hallo Minerals Water (P) Ltd., which supported the notion that reversal of credit amounts to non-taking of credit on inputs, thereby warranting the benefit of exemption. The Tribunal ultimately ruled in favor of the appellant, citing the precedent set by the High Court of Gujarat and dismissing the arguments presented by the Departmental Representative. Furthermore, the Tribunal addressed the issue of delayed reversals of CENVAT Credit by the appellant, acknowledging the necessity for interest payment on belated reversals. While the duty liability did not arise due to the reversals, the appellant was directed to pay interest as per legal provisions. The Tribunal remanded the matter to lower authorities for quantifying the interest on delayed reversals. Additionally, the penalties imposed on the appellants were deemed unwarranted and subsequently set aside. The appeals were allowed for the purpose of quantification of interest on delayed reversals, emphasizing adherence to legal requirements and precedents in determining duty liabilities and exemptions.
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