2018 (4) TMI 896 - AT - Central Excise

CENVAT credit - inputs - denial of credit on the ground that news print paper was exempted in terms of N/N. 4/2006-CE dated 01.3.2006 as amended subsequently by the N/N. 4/2008 CE, upto the initial clearance of the 3500 MT - Held that - that part of the clearance are to the newspaper, in which case, classification would be falling under sub heading 4801 which is not one of the specified in sub heading under Sl.No. 93 - Revenue cannot deny the benefit of the Sl.No. 93 to the assessee and again ask the assessee that they should have cleared their goods in terms of Sl. No. 90 - credit allowed. CENVAT credit - structural item - Held that - the benefit on such items cannot be denied - credit allowed. Extended period of limitation - Held that - Commissioner (Appeals) while disposing the appeal filed by the appellants has granted the benefit of penalty by setting aside the same on the finding that the adjudicating authority has not brought the fact of fraud, willful mis-statement, collusion or suppression of facts or contravention of any of the provision of Excise Act or Rules therein with intent to evade payment of duty - If the appellant authority has held absence of any malafide on the part of the assessee for setting aside of penalty, same ingredient would apply for the purpose of limitation - extended period not invocable. Appeal allowed - decided in favor of appellant.

Issues:
1. Availment of Cenvat credit on exempted products
2. Classification of final products under different notifications
3. Denial of Cenvat credit on input and input services
4. Benefit of Cenvat credit on structural items
5. Excess Cenvat credit availed on capital goods
6. Applicability of limitation period for raising demands

Analysis:

1. The appellant, engaged in manufacturing 'news print paper' and 'writing and printing paper,' was availing Cenvat credit on duty paid inputs. The revenue contended that as per the exemption notification, the appellant could not avail Cenvat credit for materials used in manufacturing exempted products. However, the appellant argued that they were not claiming exemption under a specific provision but were clearing products by paying 8% duty as per a different provision. The Tribunal noted the discrepancy in the revenue's interpretation and ruled in favor of the appellant, allowing the Cenvat credit.

2. The issue of classification arose concerning the final products falling under different notifications. The Tribunal clarified that while one provision granted nil rate of duty up to a specified quantity, another provision allowed goods to be cleared at an 8% rate. The appellant's products fell under the latter category, attracting the concessional rate of duty. The Tribunal emphasized that the revenue could not insist on applying the provision with nil duty when the appellant was legitimately clearing goods under the 8% duty provision.

3. The denial of Cenvat credit on input and input services was challenged by the appellant. The Tribunal examined the provisions of the notifications and found that the appellant's products fell under the category attracting an 8% duty rate, making them eligible for Cenvat credit. The revenue's contention was dismissed, and the Tribunal ruled in favor of the appellant, allowing the benefit of Cenvat credit on inputs and input services.

4. Regarding the benefit of Cenvat credit on structural items, the Tribunal referred to a previous decision that had not been approved by the High Court. The Tribunal held that the benefit could not be denied to the appellant based on the unapproved decision. Additionally, the Tribunal considered the issue of limitation and ruled in favor of the appellant, setting aside the demand related to structural items.

5. The excess Cenvat credit availed on capital goods was another issue raised by the appellant. The Tribunal noted that the amount in question was available to the appellant in the subsequent financial year, rendering the confirmation of the demand unjustified. The Tribunal also considered the limitation period in this context and ruled in favor of the appellant, setting aside the demand related to excess Cenvat credit on capital goods.

6. The applicability of the limitation period for raising demands was a crucial aspect of the judgment. The Tribunal observed that the demands were raised for a specific period by invoking the longer limitation period. However, since the Commissioner had already set aside the penalty due to the absence of malafide intent, the Tribunal ruled that the extended period for raising demands was not justified. Consequently, the Tribunal allowed the appeal, providing consequential relief to the appellants based on the absence of suppression, misstatement, or fraud.

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