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2018 (1) TMI 1165 - AT - Central ExciseRefund of CENVAT credit - inputs/packing materials - manufacture of peanut butter - N/N. 3/2006-Central Excise dated 1.3.2006 - Held that - This Tribunal in similar circumstances in the case of M/s. Bajaj Food Ltd. Versus CCE, Ahmedabad 2013 (11) TMI 1122 - CESTAT AHMEDABAD considered the plea of the Appellant for cash refund of the accumulated credit availed on export of finished products against claim of rebate and held that since credit on input is not admissible, accordingly cash refund is also not admissible. The Appellant-Assessee had reversed the credit of ₹ 21,15,123/- and it is not clear whether they had reversed the credit of ₹ 8,40,407/-. Therefore, to ascertain reversal of the same amount which they are required to reverse being disallowed by the ld. Commissioner (Appeals), the matter needs to be remanded to the adjudicating authority for the purpose of verification - appeal allowed by way of remand.
Issues:
1. Eligibility of Assessee to avail CENVAT credit on inputs/packing materials for fully exempted Peanut Butter. 2. Admissibility of CENVAT credit on inputs used in the manufacture of exempted goods exported under rebate. 3. Verification of the amount reversed by the Assessee and applicability of interest and penalty. Analysis: 1. The case involves two Appeals filed by the Assessee and the Revenue against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs, Ahmedabad. The Assessee, engaged in manufacturing Peanut Butter fully exempted from excise duty, availed CENVAT credit on inputs/packing materials during August 2010 to July 2011. The dispute arose when a show cause notice was issued for recovery of the CENVAT credit on the grounds of ineligibility. The ld. Commissioner (Appeals) upheld the recovery of CENVAT credit but set aside the recovery of interest and penalty. 2. The Assessee contended their eligibility to avail CENVAT credit on inputs/packing materials despite the finished product being fully exempted and exported under rebate. They relied on judgments by the Tribunal and the Hon'ble Bombay High Court to support their claim. On the contrary, the Revenue argued that previous Tribunal judgments indicated ineligibility for CENVAT credit on inputs used in manufacturing exempted goods cleared for export under rebate. 3. Upon hearing both sides and examining the record, the Tribunal observed that no CENVAT credit is admissible if duty paid inputs are used in the manufacture of exempted goods like Peanut Butter. The Tribunal referred to relevant rules and provisions to support its decision. Consequently, the Tribunal upheld the order for recovery of erroneous credit availed by the Assessee, dismissing their Appeal as devoid of merit. 4. Regarding the amount reversed by the Assessee and the applicability of interest and penalty, the Tribunal found discrepancies in the amount reversed and ordered a remand to the adjudicating authority for verification. However, concerning interest on the availed CENVAT credit, the Tribunal noted that the credit was maintained for claiming rebate on inputs used in exported finished goods, leading to the justification of setting aside the penalty and interests as per the ld. Commissioner (Appeals) order. In conclusion, the Tribunal disposed of the Appeals accordingly, emphasizing the inadmissibility of CENVAT credit on inputs used in manufacturing fully exempted goods like Peanut Butter, even when exported under rebate, and the need for verification of the reversed amount by the Assessee.
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