2016 (9) TMI 891 - HC - Central Excise

Cenvat Credit - Inputs/Services used in the manufacture of exempted goods - Rule 6 of the Cenvat Credit Rules, 2004 - respondent is clearing one of their products i.e. 100% cotton item under nil rate of duty - export of goods manufactured - Held that - once the issue involved in the present appeal has already been gone into by Hon ble Supreme Court and judgments of Bombay High Court in the case of Union of India Vs. Sharp Menthol India Ltd. 2011 (4) TMI 27 - BOMBAY HIGH COURT and Himachal Pradesh High Court in the case of Commissioner of Central Excise Vs. Drish Shoes Ltd. 2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT , have been upheld granting relief to the assessee, we do not find that any substantial question of law arises in the present appeal. - Decided against the Revenue

Summary

Issues:
Claim of input tax credit by the assessee, Violation of Rule 3 and Rule 6 of the CENVAT Credit Rules, 2004, Disallowance and recovery of wrongly availed Cenvat Credit under Rule 14 of the Cenvat Credit Rules, 2004.

Claim of Input Tax Credit:
The issue pertains to the claim of input tax credit by the assessee for goods exported out of the country which were not leviable to any tax. The adjudicating authority had accepted the claim, leading the revenue department to file an appeal before the Tribunal. The Tribunal, citing judgments from the Bombay High Court and Himachal Pradesh High Court, dismissed the appeal filed by the department. The Tribunal highlighted that the issue had already been addressed by the High Courts, with the Supreme Court upholding the Bombay High Court's decision in a similar case. Consequently, the High Court found no substantial question of law in the present appeal and dismissed it.

Violation of CENVAT Credit Rules:
The question of whether the respondent violated Rule 3 and Rule 6 of the CENVAT Credit Rules, 2004 was raised. The Tribunal's decision was influenced by judgments from various High Courts, including the Bombay High Court and Himachal Pradesh High Court. Notably, the Supreme Court had previously dismissed an appeal related to a similar issue, affirming the decision of the Bombay High Court. Given the consistent rulings in favor of the assessee by the higher courts, the High Court concluded that no substantial question of law arose in the current appeal and consequently dismissed it.

Disallowance and Recovery of Cenvat Credit:
Another issue raised was whether the wrongly availed Cenvat Credit by the respondent should be disallowed and recovered under Rule 14 of the Cenvat Credit Rules, 2004, along with applicable interest. The Tribunal's decision, supported by precedents from various High Courts, favored the assessee. The Supreme Court's dismissal of an appeal related to a similar matter further strengthened the position in favor of the assessee. Consequently, the High Court, after considering the previous judgments and the Supreme Court's decision, found no substantial question of law warranting further consideration and dismissed the appeal accordingly.