2016 (11) TMI 1334 - AT - Central Excise

Exemption under Notification No. 6/2006-CE - competitive bidding - Rule 6(3)(b) of Cenvat Credit Rules, 2004 - Held that - There is no dispute about the fact that in respect of supplied made by a manufacturer against international competitive bidding by availing full exemption under notification No. 6/2006-CE (Sl. No. 91) the provisions of sub rule (1), (2), (3) of Rule 6 are not applicable in view of the provisions of sub-rule (6) of Rule 6. When the appellant had wrongly paid the amount under rule 6(3) of the Cenvat Credit Rules and had requested the Department for its re-credit and thereafter had reminded the department for the re-credit and when in pursuance of their request for re-credit, the same had been allowed by the Assistant Commissioner vide order dated 20.04.2009 just because the appellant had taken the re-credit on their own on 31.03.2008, there would be no justification for imposition of penalty when the Assistant Commissioner vide order dated 20.04.2009 had permitted the re-credit of ₹ 9,80,354/- this credit would be treated as available for the month 2009 and hence there would be no excess utilization of credit during that month. In view of this, the cenvat credit demand and penalty does not appear to be sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Incorrect reversal of cenvat credit amount under Rule 6(3)(b) by the appellant.
2. Imposition of penalty and demand confirmation by the Assistant Commissioner.
3. Appeal against the order of the Commissioner (Appeals) regarding cenvat credit demand and penalty.

Analysis:
1. The appellant, a manufacturer of 'Dehumidifying Type Compressed Air Dryer,' supplied goods to NTPC under international competitive bidding with full duty exemption under Notification No. 6/2006-CE. Due to not maintaining separate accounts for dutiable and exempted final products, they mistakenly paid an amount under Rule 6(3)(b) of Cenvat Credit Rules. Upon realizing their error, they requested re-credit from the Assistant Commissioner, which was allowed on 20.04.2009 after the appellant took re-credit on 31.03.2009. The Commissioner (Appeals) upheld the demand and penalty imposed by the Assistant Commissioner, leading to the current appeal.

2. The appellant argued that as per Rule 6(6) of Cenvat Credit Rules, the provisions of sub-rules (1), (2), (3), and (4) are not applicable for goods supplied against international competitive bidding with full duty exemption. They contended that the penalty imposed for taking suo moto credit and the allegation of excess utilization of cenvat credit were unjustified. The Revenue opposed the stay application, stating that the appellant was not allowed to take suo moto credit even if eligible for re-credit.

3. The Tribunal noted that under Rule 6(6), the provisions of sub-rules (1), (2), and (3) were not applicable for goods supplied against international competitive bidding with full exemption. The appellant's request for re-credit was eventually allowed by the Assistant Commissioner on 20.04.2009, rendering the penalty and demand unsustainable. The Tribunal allowed the appeal, providing consequential relief if any, based on the above analysis.