2022 (1) TMI 203 - AT - Central Excise

Area based exemption - case of department is that appellant have availed the credit therefore the condition of the notification no. 30/2004-CE was violated - appellant paid an amount equal to 6% under rule 6(3) of Cenvat Credit Rules, 2004 - HELD THAT - The appellant right from the adjudication stage and before this appellate tribunal submitted that there is specific provision under rule 6 (3D) according to which even if the Cenvat credit is availed and reversal of an amount at the rate of 6% is made it will amount to non availment of Cenvat credit and the condition of the notification stands complied with. It is found that the adjudicating authority has not touched upon rule 6(3D) of the Cenvat Credit Rules, 2004 while deciding the eligibility of the exemption notification no. 30/2004-CE dated 09.07.2004. The main defence of the appellant is on Rule 6(3D) but since the same was not considered by the adjudicating authority and no independent finding was given, the impugned orders are non speaking therefore the same are not sustainable. Matters remanded to the adjudicating authority for passing a fresh de-novo order within a period of three months from the date of this order - appeal allowed by way of remand.

Summary

Issues:
- Availment of Cenvat Credit and exemption under Notification No. 30/2004-CE
- Compliance with Rule 6(3D) of Cenvat Credit Rules, 2004
- Eligibility for exemption under Notification No. 30/2004-CE

Analysis:

Availment of Cenvat Credit and exemption under Notification No. 30/2004-CE:
The case involved the appellants, engaged in the manufacture of Texturized Yarn, who availed Cenvat Credit and cleared finished goods without duty payment under Notification No. 30/2004-CE. The issue arose when it was observed that the appellants had paid an amount equal to 6% under Rule 6(3) of Cenvat Credit Rules, 2004. The department contended that by availing Cenvat credit, the appellants contravened the conditions of the notification, making the goods liable for Central Excise Duty. The show cause notices proposed denial of exemption, duty demand, interest, penalty, and recovery of the 6% amount paid. The appeals were filed challenging these proposals.

Compliance with Rule 6(3D) of Cenvat Credit Rules, 2004:
The appellants argued that under Rule 6(3D) of the Cenvat Credit Rules, even if Cenvat credit is availed and an amount is reversed at 6%, it should be considered as non-availment of credit, thereby complying with the notification's conditions. However, the adjudicating authority did not address this provision while deciding on the exemption's eligibility. The appellate tribunal noted that the main defense of the appellant was based on Rule 6(3D), but since it was not considered and no independent finding was provided, the impugned orders were deemed non-speaking and unsustainable.

Eligibility for exemption under Notification No. 30/2004-CE:
After considering the submissions and records, the appellate tribunal set aside the impugned orders and remanded the matters to the adjudicating authority for a fresh de-novo order within three months from the date of the decision. The appeals were allowed by way of remand to the adjudicating authority, emphasizing the need for a proper consideration of Rule 6(3D) in determining the eligibility for the exemption under Notification No. 30/2004-CE.

This judgment highlights the importance of thorough consideration of relevant legal provisions and defenses in tax matters to ensure a fair and accurate determination of liability and entitlement to exemptions.