2019 (4) TMI 435 - AT - Central Excise

CENVAT Credit - dutiable goods subsequently became exempt goods - inputs used in the manufacture of said final product and is lying in stock or in process or is contained in final product lying in stock - N/N. 30/2004 CE dated 09.07.2004 - Held that - The N/N. 30/2004 CE dated 09.07.2004 is not an absolute notification but a conditional notification issued under section 5A. The notification has the condition of non availment of cenvat credit. The sub-rule (3) (i) and (ii) of Rule 11 of the CCR, 2004 are separate - In the present case the sub rule 3 (i) would thus apply as per which the manufacturer is required to pay an amount equivalent to the CENVAT Credit in respect of inputs used in the manufacture of said final product and is lying in stock or in process or is contained in final product lying in stock. In the present case all the conditions enumerated under sub rule 3 (i) has been followed by the Appellant and he is not required to reverse the entire credit lying in balance on the date of opting notification No. 30/2004 CE dated 09.07.2004. Therefore, the balance credit is not liable to be reversed. For the same reason the credit utilised by him for clearance of finished goods or capital goods. On similar issues in the case of Wearit Global Ltd. 2018 (8) TMI 1094 - CESTAT NEW DELHI , Janson Textile Processors 2018 (7) TMI 850 - CESTAT CHENNAI and Sitaram India Ltd. 2018 (10) TMI 11 - CESTAT NEW DELHI , the credit stands allowed to the manufacturer. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of cenvat credit under different notifications.
2. Allegation of reversal of accumulated credit and duty payment on finished goods.
3. Applicability of Rule 11 (3) of CCR, 2004.
4. Imposition of penalty on the Excise Manager.

Analysis:

Issue 1: Availment of cenvat credit under different notifications
The Appellant, engaged in the manufacture of Polyester Texturised yarn, shifted between Notification No. 30/2004-CE and 29/2004-CE for clearance of goods. The show cause notice alleged wrongful availment of credit on capital goods and utilization of credit for duty payment on wastage. The demands were raised based on the shift between notifications and the utilization of cenvat credit during this period.

Issue 2: Allegation of reversal of accumulated credit and duty payment on finished goods
The show cause notice proposed demands for the reversal of accumulated credit, duty payment on finished goods, and penalty. The adjudicating authority confirmed the demands, including the reversal of credit, duty on finished goods, and interest. Additionally, a penalty was imposed on the Excise Manager, leading to the filing of appeals.

Issue 3: Applicability of Rule 11 (3) of CCR, 2004
The Appellant argued that Notification No. 30/2004-CE was a conditional notification, making Rule 11 (3) inapplicable. They contended that their case fell under Rule 11 (3) (i) of CCR, 2004, applicable to assessees opting for conditional exemption notifications under Section 5A. The Tribunal found that the conditions of Rule 11 (3) (i) were met by the Appellant, and hence, the balance credit was not liable to be reversed.

Issue 4: Imposition of penalty on the Excise Manager
The penalty was imposed on the Excise Manager, Sh. Shivkaran Choudhary, for his role as an authorized signatory. The Appellant's counsel argued against the penalty imposition, which was supported by the Revenue. However, the Tribunal allowed the appeals of both the Appellants, granting consequential reliefs. The Revenue's appeal, involving an amount less than ?20L, was dismissed based on the Government's litigation policy instruction.

This judgment by the Appellate Tribunal CESTAT Ahmedabad, delivered by Mr. Ramesh Nair and Mr. Raju, Member, addressed the issues of cenvat credit availment, reversal of credit, applicability of Rule 11 (3) of CCR, 2004, and penalty imposition on the Excise Manager, providing detailed analysis and legal interpretation to resolve the disputes.