2015 (12) TMI 1051 - AT - Central Excise

Benefit of cenvat credit - Simultaneous benefit of Notification No. 30/2004-CE and Notifications 29/2004 - Non maintenance of separate accounts - Held that - Appellant can avail the benefit of both the Notifications i.e. 29/2004-CE and 30/2004-CE, at the relevant time of clearing the final product. It is also not in dispute that the appellant has been availing the cenvat credit only to the extent of 20% of the duty paid on various inputs and forgoing the credit to the extent of 80% based on their ratio of turnover of dutiable goods vis-a-vis the exempted goods. This position is reflected in their accounts also. The appellant has been maintaining the requisite records in respect of receipts and consumption of inputs and availment and utilization of cenvat credit. Here it is pertinent to mention the circular issued by the Board vide Circular No.703/19/2003-CX dated 25.3.2003 issued in the wake of revamping of central excise duty structure for textile industry by Finance Budget 2003. Appellant s case is fully covered by the circular cited above. Moreover, the benefit of credit is sought to be denied on purely technical grounds. It is settled law that substantive benefit cannot be denied merely on technical grounds - impugned order is liable to be set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against order-in-appeal upholding order-in-original for wrong availment of cenvat credit. Compliance with Rule 6(2) of Cenvat Credit Rules, 2002. Interpretation of circular No.703/19/2003-CX. Denial of cenvat credit for not maintaining separate accounts. Legal validity of impugned order.

Analysis:
The appeals were directed against order-in-appeal upholding order-in-original confirming demand towards cenvat credit. The appellant processed manmade textile fabrics and availed cenvat credit on grey fabrics as per Rule 3 of Cenvat Credit Rules, 2004. The dispute arose from the appellant availing benefits under Notifications 29/2004 and 30/2004, leading to a show cause notice for wrong availment of credit. The adjudicating authority confirmed the demand, imposing penalties. Appeals were filed before Commissioner (Appeals) and CESTAT, which remanded the matter for fresh adjudication. The impugned order was challenged on grounds of illegality, improperness, and non-compliance with statutory provisions.

The appellant argued compliance with Rule 6(2) of Cenvat Credit Rules, maintaining separate accounts for dutiable and exempted goods. The appellant contended that denial of credit was against Board's circular No.703/19/2003-CX, binding on Revenue. The circular allowed credit on inputs used for dutiable clearances even if some were used for exempted goods. The appellant's compliance with the circular was emphasized, supported by a precedent judgment. The Revenue, however, argued non-compliance with Rule 6(2) and ineligibility for credit, leading to interest and penalties.

Upon review, it was noted that the appellant availed credit as per the ratio of dutiable to exempted goods, maintaining necessary records. The circular's binding nature on Revenue was affirmed, emphasizing non-discrimination against the appellant. The appellant's compliance with Rule 6(2) was deemed satisfactory, supported by relevant judgments. Denial of credit on technical grounds was rejected, emphasizing substantive benefit over technicalities. Consequently, the impugned order was set aside, allowing the appeals with any consequential relief.

In conclusion, the judgment addressed issues of cenvat credit availment, compliance with rules, interpretation of circulars, and legality of the impugned order. It highlighted the importance of maintaining separate accounts, adherence to circular instructions, and substantive benefit entitlement. The decision favored the appellant, setting aside the impugned order and providing relief.