2018 (9) TMI 638 - AT - Central Excise

PPMF Yarn - Benefit of N/N. 30/2004-CE dated 09.07.2004 - The case of the department is that, during the period 15.07.2004 to 21.10.2004, the appellant have cleared PPMF Yarn at nil rate of duty and at the same time, they availed Cenvat credit also - Held that - The appellant have reversed the credit on fortnightly basis. It is also observed that the credit which was supposed to be reversed, against which the Cenvat credit balance was much higher than the credit reversed. Therefore, prima-facie, the appellant has reversed the credit without utilization of the same, in terms of Rule 6, sub-clause (7). Hon ble Supreme Court in the case of Commissioner vs. Bombay Dyeing and Mfg. Company Limited 2007 (8) TMI 2 - SUPREME COURT , held that if the credit is reversed even after clearance of the goods and before utilization of the credit, the exemption under Notification No. 30/2004-CE is available to the assessee. It is observed from the order of both the lower authorities that they have not verified the regarding the non-utilisation of Cenvat credit and reversal of credit on fortnightly basis, therefore, only for that purpose, the matter needs to be remanded - appeal allowed by way of remand.

Summary

Issues:
1. Applicability of Notification No. 30/2004-CE regarding duty exemption for PPMF Yarn.
2. Availing of Cenvat credit while claiming duty exemption.
3. Compliance with Rule 6 regarding reversal of Cenvat credit.
4. Interpretation of the judgment in the case of Commissioner vs. Bombay Dyeing and Mfg. Company Limited.

Analysis:
The case involved the appellant, engaged in manufacturing dutiable goods including PPMF Yarn, which was fully exempt from duty under Notification No. 30/2004-CE, provided no Cenvat credit was availed on inputs. The department alleged that the appellant cleared PPMF Yarn at nil duty rate while availing Cenvat credit during a specific period, leading to a duty demand.

The appellant's advocate argued that they complied with the notification and Rule 6 by reversing Cenvat credit fortnightly, maintaining a credit balance higher than the reversible amount. Referring to the RG 23 Part-A register, it was shown that credit reversal was done without utilization, making them eligible for the exemption.

The Deputy Commissioner reiterated the impugned order's findings, leading to a detailed analysis by the Tribunal. The Tribunal observed that the appellant had indeed reversed credit as required, with the balance exceeding the reversible amount. Citing the judgment in Commissioner vs. Bombay Dyeing and Mfg. Company Limited, the Tribunal noted that if credit is reversed before utilization, the exemption applies. The lower authorities were faulted for not verifying non-utilization of credit and the reversal frequency, necessitating a remand.

Consequently, the Tribunal set aside the impugned order, allowing the appeal for remand to verify compliance with Rule 6 and the entitlement to Notification No. 30/2004-CE. The decision was based on the appellant's reversal of credit post-clearance without utilization, aligning with the legal precedent cited.

In conclusion, the judgment clarified the conditions for duty exemption under Notification No. 30/2004-CE, emphasizing the importance of complying with Rule 6 and the timing of credit reversal as per established legal interpretations.