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2015 (10) TMI 2207 - AT - Central ExciseCENVAT Credit - Whether Cenvat Credit lying in their Cenvat Credit account lapse as per Rule 571-1(7) ibid on 01.03.2000 that when their product became exempted under notification no. 7/2000 dated 01.03.2000 or not - Held that - On plain reading of the said Rule if goods are exempted under notification based on value of clearance in financial year, in that case as per Rule 57H(7) the Cenvat Credit lying in their Cenvat Credit account shall lapse. But in the case in hand, the final product of the appellant became exempted under notification no.07/2000 dated 01.03.2000 wholly and same is not on the basis of the value or quantity of clearance by the appellant. Therefore, we hold that provisions of Rule 57H(7) ibid are not applicable to the facts of the case. Therefore, Cenvat Credit of ₹ 5,67,97,164/- shall not lapse - Consequently, the demand will also no sustain. - Decided in favour of assessee.
Issues:
1. Interpretation of Rule 57H(7) regarding lapsing of Cenvat Credit under exemption notification. 2. Applicability of Rule 57H(7) to the facts of the case. 3. Assessment of the demand raised on Cenvat Credit utilization. Analysis: Issue 1: Interpretation of Rule 57H(7) regarding lapsing of Cenvat Credit under exemption notification. The Tribunal analyzed Rule 57H(7) which states that if goods are exempted under a notification based on the value or quantity of clearances in a financial year, the Cenvat Credit shall lapse. However, in this case, the final product of the appellant was wholly exempted under notification no. 07/2000 dated 01.03.2000, not based on the value or quantity of clearance by the appellant. Therefore, the Tribunal concluded that Rule 57H(7) did not apply, and the Cenvat Credit of Rs. 5,67,97,164/- shall not lapse. Issue 2: Applicability of Rule 57H(7) to the facts of the case. The appellant argued that Rule 57H(7) does not apply to their case as the notification under which they availed exemption was not based on the value or quantity of clearance in a financial year. The Tribunal agreed with this argument, stating that since the exemption was not tied to the value or quantity of clearance by the appellant, the provisions of Rule 57H(7) were not applicable in this scenario. Issue 3: Assessment of the demand raised on Cenvat Credit utilization. The appellant had accumulated credit of Rs. 5,27,97,614/-, which was not reversed as it was pertaining to inputs in stock when the final product became dutiable. The appellant utilized a portion of this credit for duty payment. However, a show cause notice was issued demanding duty payment and denying the Cenvat Credit. The Tribunal, after considering the arguments and the legal provisions, set aside the demand of Rs. 13,54,094/- as the Rule 57H(7) did not apply, and the Cenvat Credit was held not to lapse. In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief, if any, to the appellant based on the analysis and interpretation of Rule 57H(7) and the specific circumstances of the case.
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