2017 (1) TMI 1181 - AT - Central Excise

SSI exemption - unbranded storage tanks - denial on the ground that the assessee availed credit on plastic granules, which were common inputs for both type of tanks - Held that - it is admitted in the SCN that at the time of issue of credit availed inputs to the manufacture of intermediate powder, the appellants are showing the credit attributable to such granules, which are intended for the manufacture of unbranded tanks and are accordingly reversing the same. Such reversal will satisfy the condition of non-avialment of cenvat credit - The ratio of the Hon ble Supreme Court s decision in the case of Chandrapur Magnet Wires (P) Ltd. 1995 (12) TMI 72 - SUPREME COURT OF INDIA is rightly applicable to such situation - the same procedure had been followed by the appellant. As credit availed has been reversed whenever the input granules are used in the manufacture of unbranded tanks, the exemption will be available - appeal allowed - decided in favor of assessee.

Summary

Issues: Eligibility for small scale exemption under Notification no. 8/03-CE for manufacturing unbranded storage tanks while availing cenvat credit on common inputs.

In this case, the appellants were engaged in manufacturing water storage tanks of PVC, both branded and unbranded, and were claiming small scale exemption under Notification no.8/03-CE for unbranded tanks while availing cenvat credit on common inputs, specifically plastic granules. The Revenue contended that since cenvat credit was being availed on inputs, the appellants were not eligible for the SSI exemption as per the conditions of the Notification. Proceedings were initiated, resulting in a demand confirmation of &8377; 75,90,000/- along with a penalty. The appellant argued that they had reversed the credit attributable to the inputs used in manufacturing unbranded tanks, complying with the non-availment condition of the exemption. They also highlighted that demands for subsequent periods on the same matter had been dropped by the Commissioner (Appeals) without any appeal from the Department. The Revenue, however, maintained their stance, stating a lack of documentary evidence supporting the appellant's claim of non-availment of credit on common inputs.

The Tribunal deliberated on the eligibility of the appellant for the small scale exemption under Notification no. 8/2003-CE concerning the manufacturing of unbranded storage tanks. It was acknowledged that the appellants utilized common inputs, plastic granules, for both branded and unbranded tanks. The Tribunal noted that the appellants demonstrated compliance with the non-availment condition by reversing the credit attributable to the granules used in manufacturing unbranded tanks. Drawing reference to a Supreme Court decision, the Tribunal found the appellant's procedure acceptable, especially since the Department had dropped demands for subsequent periods based on the same practice. Given the appellant's assertion and evidence of credit reversal for inputs used in unbranded tanks, the Tribunal concluded that the impugned order lacked merit and was set aside, allowing the appeal. The cross objections filed by the Revenue were also disposed of accordingly.