2017 (1) TMI 218 - AT - Central Excise

Benefit of exemption Notification 3/2001-CE 10/2002-CE and 6/2003-CE - the respondent has availed CENVAT credit in respect of furnace oil which was reversed subsequently - Held that - the learned Commissioner (Appeals) placed reliance in the case of CHANDRAPUR MAGNET WIRES (P) LTD. Versus COLLECTOR OF C. EXCISE NAGPUR 1995 (12) TMI 72 - SUPREME COURT OF INDIA where it was held that once the credit is reversed the inputs become as if no credit was availed - on reversal of the CENVAT credit already availed the assessee is entitled to beneficial exemption Notification - appeal dismissed - decided against appellant-Revenue.

Summary

Issues:
Violation of conditions for availing exemption under Notification No. 3/2000-CE, 10/2002-CE, and 6/2003-CE due to availing CENVAT credit on furnace oil.

Analysis:
The case involved the appellant engaged in manufacturing aluminum products availing CENVAT credit facility. The appellant faced a show cause notice alleging violation of conditions for exemption under specific notifications due to availing CENVAT credit on furnace oil used in manufacturing aluminum circles and utensils. The dispute revolved around the eligibility for exemption under the mentioned notifications, which required non-availment of CENVAT credit on inputs or capital goods. The adjudicating authority confirmed the demand, interest, and penalty, which was later set aside by the Commissioner (Appeals), leading to the Revenue's appeal.

The Revenue contended that the appellant's availing of CENVAT credit on furnace oil violated the conditions of the exemption notifications, citing relevant judgments in support. The Tribunal noted that the notifications indeed required non-availment of CENVAT credit on inputs or capital goods, and the appellant had only availed credit on furnace oil. The appellant reversed the CENVAT credit on furnace oil, claiming it amounted to non-availment. The Commissioner (Appeals) accepted this argument, considering the reversal as compliance with the notification conditions, referencing legal precedents to support the decision.

The Tribunal carefully reviewed the submissions and records, emphasizing that the appellant had reversed the CENVAT credit on furnace oil, which was the only credit availed. The Tribunal highlighted the Commissioner (Appeals)'s findings, which determined that the reversal of credit equated to non-availment, aligning with the Supreme Court's precedent in similar cases. The Tribunal distinguished the present case from the judgments cited by the Revenue, where credit was not reversed, leading to denial of exemption. Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision, dismissing the Revenue's appeal due to the factual finding of credit reversal by the appellant, satisfying the conditions of the exemption notifications.

In conclusion, the Tribunal found no fault in the Commissioner (Appeals)'s decision, upholding the appellant's entitlement to the exemption under the notifications based on the reversal of CENVAT credit on furnace oil. The judgment was pronounced on 01/12/2016, settling the dispute regarding the eligibility for exemption under the specific notifications.