2018 (8) TMI 892 - HC - Central Excise

CENVAT Credit - two notification available - N/N. 02/2008 dated 01.03.2008 and N/N. 05/2006 - Whether CESTAT was right in concluding that Revenue intends to compel assessee to avail the Notification No.05/2006-CE when the fact is that it was assessee s decision to avail Notification No.05/2006 - CE? Held that - No substantial question of law arises in the present case requiring our consideration. It is not disputed before us that the Notification No.02/2008 dated 01.03.2008 was also applicable to the assessee in the present case for the period 07.07.2009 to 26.02.2010 in question. The Show Cause Notice of the assessing authority dated 16.03.2011 and the order (Original) Annexure- A dated 24.07.2013 clearly admits this position vide aforesaid quoted paragraph Nos.13 and 14 from the Order-in-Original. The assessee has not claimed CENVAT credit during the aforesaid relevant period in violation of condition No.7. It has started to claim the said CENVAT credit only after 01.03.2010, after the anomalous position between the two Notifications No.05/2006 with the condition against availment of CENVAT credit and Notification No.02/2008 without any such condition, was removed by the Central Government on 27.02.2010. Therefore, no malafide can be attributed to the respondent-assessee in claiming such CENVAT credit after removal of the anomaly by the Central Government itself. The claim of CENVAT credit in the eye of law by the assessee in the present case appears to be perfectly in consonance with the Notification No.02/2008 dated 01.03.2008. Merely because the assessee in the said period filed its returns in form No.ER-1 indicating the payment of said 8% excise duty under Notification No.15/2009-C.E. dated 07.07.2009, which amended the original Notification No.05/2006-C.E. dated 01.03.2006 and did not mention anything about Notification No.02/2008 dated 01.03.2008, though the said later Notification also equally applies for the said period, the respondent-assessee cannot be bound down to abide by the condition No.7 of the said Notification No.05/2006-C.E. dated 01.03.2006. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Interpretation of CESTAT's decision and consideration of Department's objections.
2. Applicability of the cited tribunal judgments regarding the entitlement of more beneficial Notification.
3. Whether CESTAT was correct in concluding that Revenue intended to compel the assessee to avail Notification No.05/2006-CE.

Issue-Wise Detailed Analysis:

1. Interpretation of CESTAT's Decision and Consideration of Department's Objections:
The Revenue contended that the assessee was not entitled to avail CENVAT credit under Notification No.05/2006-CE due to condition No.7, which prohibited availing CENVAT credit on inputs used in manufacturing ceramic tiles without electricity for firing kiln. The Revenue argued that despite the availability of another Notification No.02/2008-CE, which allowed the same rate of duty without such a condition, the assessee was not entitled to claim CENVAT credit. The adjudicating authority supported this view, stating that the assessee should have prospectively shifted to Notification No.02/2008-CE if they intended to avail CENVAT credit. The CESTAT, however, allowed the assessee's appeal, relying on its previous decisions in similar cases, including the assessee's own case and M/s. Savana Ceramics.

2. Applicability of Cited Tribunal Judgments Regarding Entitlement of More Beneficial Notification:
The CESTAT's decision was based on the precedent set in the assessee's own case and M/s. Savana Ceramics, where it was held that the Revenue could not compel the assessee to avail a less beneficial notification when a more advantageous one was available. The assessee argued that they claimed CENVAT credit only after the anomaly between the two notifications was removed by Notification No.11/2010, which omitted the contentious condition No.7 from Notification No.05/2006-CE. The Tribunal's reliance on these precedents was pivotal in allowing the assessee's appeal.

3. Whether CESTAT was Correct in Concluding that Revenue Intended to Compel Assessee to Avail Notification No.05/2006-CE:
The Tribunal concluded that the Revenue's insistence on the assessee availing Notification No.05/2006-CE was incorrect, as the assessee was entitled to choose a more beneficial notification, i.e., Notification No.02/2008-CE, which did not have the condition against availing CENVAT credit. The High Court supported this view, citing the Supreme Court's decision in Share Medical Care vs. Union of India, which established that if two exemption notifications are applicable, the assessee can claim the benefit of the more beneficial one. The High Court found no malafide on the part of the assessee in claiming CENVAT credit after the anomaly was corrected by the Central Government.

Conclusion:
The High Court dismissed the Revenue's appeal, stating that no substantial question of law arose for consideration. The Court affirmed that the assessee was entitled to claim CENVAT credit under the more beneficial Notification No.02/2008-CE and that the Revenue's attempt to compel the assessee to avail Notification No.05/2006-CE was unjustified. The appeal was dismissed, and the Tribunal's decision in favor of the assessee was upheld.