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2018 (12) TMI 927 - AT - Central ExciseRecovery of CENVAT Credit utilized on inputs and capital goods - It is the case of the Revenue that Sl. No. 90 of Notification 04/2006-CE being absolute in nature, the assessee ought to have availed the same and had no option to pay duty as per Sl. No. 91 of the above Notification - whether the disallowance of CENVAT Credit to the tune of ₹ 51,35,255/- and consequent demand of penalty under Rule 15(2) is justifiable? Held that - This Bench had occasion to decide a similar issue, in the case of M/s. Sripathi Paper & Boards Vs. C.C.E. & S.T., Tirunelveli 2018 (9) TMI 891 - CESTAT CHENNAI , where it was held that A bare reading of Sl.No. 90 of the Notification, it is found that the same is controlled by the condition No. 10. While the rate of duty on the goods described at Sl.No. 90 are nil ie., exempted, the goods at Sl.No. 91 are taxed at 4%; Sl.No. 90 is controlled by condition No. 10 whereas Sl.No. 91 is controlled by condition No. 11. The absolute exemption Notification, N/N. 29/2004-CE dated 09.07.2004 as amended by Notification No. 58/2008-CE dated 07.12.2008 and another Notification No. 59/2008-CE dated 07.12.2008, referred to emanates is mandatorily required to be availed by the assessee, whereas, the exemption Notification No. 04/2006 in the case on hand, provides two options with different duty liabilities and different conditionalities. The said Notification thus is an optional one in the hands of the assessee and is not an absolute exemption Notification. Appeal dismissed - decided against Revenue.
Issues:
1. Disallowance of CENVAT Credit and demand of penalty under Rule 15(2). Analysis: The judgment pertains to two appeals arising from an Order-in-Original passed by the Commissioner of Central Excise, Salem, concerning the period from 01.04.2010 to 19.07.2010. The appellant, engaged in manufacturing Kraft paper, availed CENVAT Credit on inputs and input services for excise duty payment. Despite being exempt from duty on the first clearances of 3500 MT of Kraft paper as per Notification No. 04/2006-CE, the appellant chose to pay duty for the disputed period. The Revenue contended that the appellant should have availed the exemption under Sl. No. 90 of the notification and not paid duty as per Sl. No. 91. A Show Cause Notice was issued, proposing recovery of wrongly availed credit, along with interest and penalty. The Order-in-Original confirmed these proposals, leading to the appeals before the Tribunal by both the Department and the assessee. During the hearing, the Revenue and the assessee were represented, and after considering the contentions and documents, the Tribunal examined the issue of disallowance of CENVAT Credit amounting to ?51,35,255 and the penalty under Rule 15(2). The Tribunal referred to a previous decision in the case of M/s. Sripathi Paper & Boards, where it was held that the exemption under Notification No. 04/2006 provides two options with different duty liabilities, making it optional for the assessee. The Tribunal concluded that the demand raised by the Commissioner was incorrect, following the same ratio decidendi as the previous case, and allowed the assessee's appeal while dismissing the Department's appeal. The Tribunal also considered a circular relied upon by the Revenue, highlighting the consequences of ambiguity in exemption notifications. However, the Tribunal found no ambiguity in the present case as the exemption under Notification No. 04/2006 provided two options with different conditionalities, making it optional for the assessee. Therefore, the Tribunal upheld its decision based on the previous ruling and allowed the assessee's appeal with consequential benefits, if any, while dismissing the Department's appeal.
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