2018 (5) TMI 383 - AT - Central Excise

SSI exemption - benefit of N/N. 8/2003-CE dated 01.03.2003 - denial on the ground that the respondent has not reversed the cenvat creit prior to opting of exemption 01.04.2008 - Held that - whatever cenvat credit lying in their cenvat credit account have been reversed by the respondent on 08.04.2008. In that circumstance, it cannot be said that the respondent is not entitled for benefit of exemption N/N. 8/2003-CE dated 01.03.2003 - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Entitlement to benefit of exemption Notification No. 8/2003 CE dated 01.03.2003 based on reversal of cenvat credit.
- Liability to pay duty, interest, and penalty for the period 01.04.2008 to 30.06.2008.

Analysis:
1. Entitlement to Benefit of Exemption Notification: The appeal before the Appellate Tribunal CESTAT CHANDIGARH concerned the entitlement of the respondent to the benefit of exemption under Notification No. 8/2003-CE dated 01.03.2003. The respondent, engaged in manufacturing electrical switchgears, had opted for this exemption from 01.04.2008. The Revenue contended that since the respondent did not reverse the cenvat credit before opting for the exemption, they were not entitled to it. However, the Ld. Commissioner (A) had granted the benefit of the exemption to the respondent, leading to the appeal by the Revenue.

2. Liability for Duty, Interest, and Penalty: The Revenue argued that the respondent had only reversed a portion of the cenvat credit, while the total demand as per the show cause notice was higher. The Revenue claimed that the remaining amount was recoverable from the respondent due to their alleged ineligibility for the exemption. The Tribunal considered the previous case of the respondent and noted that the cenvat credit had been fully reversed by the respondent on 08.04.2008, post opting for the exemption. Therefore, the Tribunal held that the respondent was indeed entitled to the benefit of the exemption Notification No. 8/2003-CE dated 01.03.2003. Consequently, the duty demanded in the show cause notice was deemed unnecessary, leading to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal upheld the decision of the Ld. Commissioner (A) and dismissed the Revenue's appeal, confirming the respondent's entitlement to the benefit of exemption Notification No. 8/2003-CE dated 01.03.2003 based on the reversal of cenvat credit and rejecting the demand for duty, interest, and penalty for the period in question.