2015 (11) TMI 1337 - AT - Central Excise

Benefit of Notification No.30/2004-CE - Reversal of CENVAT Credit - Non fulfillment of condition of notification - Held that - Appellants have fulfilled the conditions of the notification and therefore, they are eligible for the benefit of the said notification. Any violation of sub-rule (3) of Rule 11 of the CENVAT Credit Rules 2004 should invite necessary action under Rule 14 & 15 of CENVAT Credit Rules 2004 only and cannot be extended to the extent of denying the benefit of the substantial notification for that mere reason. We therefore, do not find force in the findings of the Adjudicating authority in this respect in the impugned order. The same cannot be sustained. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against Order-in-Original regarding duty free clearance under Notification No.30/2004-CE for the period April 2006 to December 2011.

Detailed Analysis:
1. The appeals were filed by M/s Supertex Industries and an employee, challenging the Order-in-Original by the Commissioner. The issue revolved around opting for duty free clearance under Notification No.30/2004-CE from April 2006 to December 2011.

2. The Assessee opted for duty free clearance on 01.04.2006 but had excess credit in CENVAT account from before. Sub-rule (3) of Rule 11 of CENVAT Credit Rules 2004 required lapsing of such credit if opting for duty exemption. The Adjudicating authority denied duty exemption due to the utilization of excess credit.

3. The Appellant argued that Rule 11 is separate from the notification and had fulfilled all notification conditions. They contended that Rule 11 had only prospective effect from 01.03.2007, not applicable to them as they opted for the benefit before. They also cited Rules 14 & 15 for any contraventions.

4. The Appellant highlighted a similar case where demand was dropped, emphasizing identical issues. They presented written submissions and case laws to support their stance.

5. The Revenue contended that the Appellant did not lapse the excess credit as required and used it for duty payment, violating Rule 11 and the notification. They argued that carrying forward the credit was akin to availing fresh credit, prohibited by the notification.

6. After considering both sides' submissions, the Tribunal found that the Appellant met notification conditions on the date of opting for duty exemption. The issue was the excess credit on that date. The Tribunal agreed that the Appellant should have lapsed the credit when Rule 11 was introduced but disagreed that it amounted to taking fresh credit. The contravention did not warrant denial of duty exemption.

7. The Tribunal held that any contravention of Rule 11 should be addressed under Rules 14 & 15, not by denying the benefit of the notification. The Adjudicating authority's findings were deemed unsustainable, leading to setting aside of the impugned order and penalty on the employee.

8. Consequently, the penalty on the employee was also set aside, and all appeals were allowed. The extension of stay order application by the Appellant was dismissed as infructuous.