2016 (8) TMI 984 - AT - Central Excise

SSI exemption Notification No. 8/2003-CE dated 01.03.2003 - eligibility for benefit - appellant failed to reverse the amount as required under Rule 11(2) - Held that - the condition precedent of the Notification No. 8/2003-CE dated 01.03.2003 read with transitional provision under the Cenvat Credit Rules, 2004 for opting for the notification at the beginning of the financial year, is that the cenvat credit attributable to the inputs, WIP as well as finished products as on 31st March of the previous year will have to be expunged and the balance cenvat credit available should be allowed to lapse. The duty demands have arisen since the appellant have not done so. Having paid the appropriate amounts on this scores subsequently, we have no hesitation to conclude that the appellant will be eligible for the benefit of notification during the disputed period. Consequently, the proposal for denying the benefit of notification and consequent demands will need to be set aside. - Decided in favour of assessee

Summary

Issues: Dispute regarding availing small scale exemption Notification No. 8/2003-CE, failure to reverse the amount as required under Rule 11(2), eligibility for benefit of notification during the disputed period.

Analysis:
1. The appellant, a manufacturer of specified goods, availed the benefit of the small scale exemption Notification No. 8/2003-CE dated 01.03.2003 for the period 01.04.2005 to 31.03.2006. This notification allows full exemption for clearance of goods up to an aggregate value of ?100 lakhs, subject to conditions like not availing duty paid on inputs as cenvat credit or utilizing credit of duty on capital goods.

2. Rule 11(2) states that a manufacturer opting for exemption under a notification based on value or quantity of clearances in a financial year must pay an amount equivalent to the CENVAT credit allowed on inputs lying in stock or in process. Failure to do so results in lapsing of the remaining credit, which cannot be utilized for duty payment on any excisable goods.

3. The dispute arose because the appellant failed to reverse the required amount under Rule 11(2) while availing the exemption. The excise duty payable on final products cleared during this period was demanded by the authorities, which was upheld by the Commissioner (Appeals), leading to the present appeal.

4. The appellant later reversed the credit of duty on inputs and paid the interest for late payment, claiming entitlement to the benefit of Notification No. 8/2003-CE during the disputed period. The appellate tribunal noted that the appellant had fulfilled the conditions subsequently, making them eligible for the notification's benefit during the disputed period.

5. After considering the submissions and records, the tribunal concluded that since the appellant had paid the appropriate amounts and met the conditions post-facto, they were indeed eligible for the notification's benefit during the disputed period. Consequently, the proposal to deny the benefit and the consequent demands were set aside, ruling in favor of the appellant.

This comprehensive analysis outlines the issues surrounding the dispute, the legal provisions involved, the arguments presented by both parties, and the tribunal's decision based on the fulfillment of conditions and eligibility criteria for the small scale exemption notification.