2016 (9) TMI 282 - AT - Central Excise

Notification 30/2004-CE dated 9.7.2004 - entitlement for exemption benefit - Cenvat Credit - appellant reversed 6% of the value of exempted goods in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004 - Held that - the appellants claim on the applicability of sub Rule (3D) of Rule 6 is legally sustainable. The said sub-rule provides for a deeming provision to the effect that payment of amount under sub-rule (3) should be considered as credit not taken for the purpose of such exemption notification. The appellant s case is covered by the said provision as pointed out by the appellant even before the introduction of the said sub-rule in 2011. The Tribunal held that payment of amount under sub-rule (3)(i) of Rule 6 will make the assessee eligible for claiming such exemption as the present one. It is found the Original Authority had fallen in error in not considering the said sub-rule (3D) and relying on explanation (3) of Rule 3 which has no relevance to the facts of the present case in view of the specific provision of sub-rule (3D) of Rule 6. - Decided in favour of appellant

Summary

Issues:
- Eligibility for exemption under Notification 30/2004-CE when reversing 6% of the value of exempted goods in terms of Rule 6(3)(i).

Analysis:
The appeal challenged an order by the Commissioner of Central Excise regarding the eligibility of the appellants for exemption under Notification 30/2004-CE. The appellants, engaged in manufacturing cotton and synthetic yarn, availed cenvat credit on inputs, input services, and capital goods. They cleared a portion of finished goods without duty payment under a specific notification, paying 6% of the value for exempted goods as per Rule 6(3)(i). The Revenue contended that since the appellants availed credit on all inputs, they were disqualified from the notification. The appellants argued that payment under Rule 6(3)(i) made them eligible for the exemption, citing Rule 6(3D) of the Cenvat Credit Rules, 2004. The Tribunal analyzed the deeming provision of Rule 6(3D) and previous case laws, including Life Long Appliances Ltd. and Sita Singh & Sons, supporting the appellant's position.

The Tribunal found the appellant's claim of eligibility for exemption under Notification 30/2004-CE to be legally sustainable. Rule 6(3D) provided a deeming provision that payment under sub-rule (3) should be considered as credit not taken for the purpose of the exemption notification. The Tribunal noted that the appellant's case fell within the purview of this provision, even before its introduction in 2011. Relying on case laws and the deeming provision, the Tribunal held that payment under Rule 6(3)(i) made the assessee eligible for the exemption. The Tribunal emphasized that the Original Authority erred in not considering Rule 6(3D) and relying on a different explanation, which was deemed irrelevant in the present case. Consequently, the Tribunal set aside the impugned order, deeming it unsustainable, and allowed the appeal in favor of the appellants.

In conclusion, the Tribunal's detailed analysis of Rule 6(3D) and relevant case laws supported the appellant's entitlement to exemption under Notification 30/2004-CE, despite availing credit on all inputs. The decision highlighted the importance of specific legal provisions and deeming provisions in determining eligibility for exemptions under the Cenvat Credit Rules, 2004.