2020 (12) TMI 950 - AT - Central Excise

Reversal of irregularly availed CENVAT Credit - Rule 6(1) of the Cenvat Credit Rules - benefit of N/N. 65/95-CE available - Interpretation of statute - N/N. 65/95-CE - whether Notification No. 65/95-CE is a notification which grants exemption absolutely as envisaged under Section 5A(1) of the Act and consequently sub-section (1A) of Section 5A is attracted? - HELD THAT - Referring to and relying upon the decisions of the Hon ble Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FEDERAL MOGUL TPR INDIA LTD. 2015 (8) TMI 308 - KARNATAKA HIGH COURT , of the Coordinate Bench of the Tribunal in M/S INCOPAC PARTS PVT. LTD. VERSUS CCE CGST, JAIPUR 2018 (7) TMI 1366 - CESTAT NEW DELHI and BALKRISHNA PAPER MILLS LTD, LAXMI BOARD AND PAPER MILLS LTD, COMMISSIONER OF CENTRAL EXCISE, THANE-I VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE I AND LAXMI BOARD AND PAPER MILLS LTD 2015 (11) TMI 210 - CESTAT MUMBAI , all involving similar issue, it has been held in the said order dated 28.07.2020 that the finding in the impugned order that availment of cenvat credit by the appellant during the material periods was by contravening the provisions of Rule 6(1) of the said Rules is incorrect and unsustainable and there is no irregularity or wrong availment of cenvat credit by the appellant; the appellant had the option to avail or not to avail the exemption under N/N. 65/95-CE and since it paid duty on the goods manufactured without availing the exemption, the appellant was eligible to avail the cenvat credit involved. CENVAT Credit is rightly availed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original confirming demand of cenvat credit, interest, and penalty - Whether exemption notification grants absolute exemption - Applicability of Section 11D(1) regarding duty collection.

Analysis:
The appeals challenged Order-in-Original confirming a demand of cenvat credit, interest, and penalty imposed by the Commissioner of Central Excise & Service Tax, Jamshedpur. The issue revolved around whether the exemption notification, specifically Notification No. 65/95-CE, granted absolute exemption as per Section 5A(1) of the Act. The appellant contended that a previous order by the Tribunal in a similar case favored them, allowing the appeals and setting aside the impugned order. The Commissioner imposed a penalty under Rule 15(2) of the Cenvat Credit Rules and appropriated duty paid on final products. The proceedings covered two show cause notices for different periods.

The Tribunal analyzed the previous order involving the same parties and found identical facts, except for periods and amounts. The main issue was the interpretation of Notification No. 65/95-CE and whether it granted absolute exemption. The Tribunal concluded that the notification was conditional, requiring fulfillment of specific criteria for exemption eligibility. It held that Section 5A(1A) did not apply as the exemption was not absolute. The appellant had the option to avail or not avail the exemption, and since duty was paid on manufactured goods, cenvat credit was eligible.

Regarding the applicability of Section 11D(1) of the Act, the Tribunal found no evidence that the appellant collected any amount in excess of assessed duty or representing duty on exempt goods. As the appellant chose not to avail the conditional exemption, Section 11D did not apply. The appropriation made by the impugned order was deemed erroneous and unsustainable. The Tribunal relied on precedent decisions to support its findings and principles.

Ultimately, the Tribunal set aside the impugned order dated September 13, 2013, passed by the Commissioner, and allowed the appeals with consequential relief. The decision was based on the application of principles and findings from a previous order involving the same parties. The Tribunal found the impugned order unsustainable in light of the previous decision, leading to the appeals being allowed.