2023 (10) TMI 288 - AT - Central Excise

CENVAT Credit - inputs - Option to avail benefit of exemption and Cenvat Credit - Scope of Section 5A - N/N. 04/2006-CE under Sr. No. 91 which prescribes the concessional rate of duty of 4% with condition No. 11 - HELD THAT - The exemption notification entries it is clear that both exemption entries carry conditions for allowing either nil rate of duty or 4 % of duty therefore there is no doubt that both the exemption entries are conditional. The contention of the Revenue is based on Section 5A (1A) which prescribes that in case of absolute exemption the asseessee has no option except to avail such exemption. In the present case, both the exemption entries are subject to certain conditions therefore both the entries have absolute exemption. In this position it is an option to the appellant to choose any one of the exemption entries. Therefore, in the present case the appellant has chosen to avail the exemption under Sr No. 91 is absolutely legal and correct. There is no doubt that the appellant has availed the exemption under Sr. No 91 correctly and legally - they are entitled for the cenvat credit under Cenvat Credit Rules, 2004. Appeal is allowed.

Summary

Issues Involved:
The issue involves the availing of cenvat credit by the appellant under two exemption notifications, one prescribing a nil rate of duty and the other a concessional rate of duty of 4%, leading to a dispute on the correct exemption to be availed.

Summary of Judgment:

1. Availing of Cenvat Credit:
The appellant availed cenvat credit under Sr. No. 91 of Notification 04/2006-CE, which prescribes a concessional rate of duty of 4%. The department contended that since there was an exemption under Sr. No. 90 of the same notification, attracting a nil rate of duty, the appellant was required to mandatorily avail that exemption. The department argued that the exemption under Sr. No. 90 is absolute in nature, and the appellant had no option but to opt for that notification, hence disallowing the cenvat credit.

2. Appellant's Submission:
The appellant's counsel argued that both exemptions under Sr. No. 90 and Sr. No. 91 are conditional, providing the assessee with the option to choose either. Referring to a previous Tribunal decision, the appellant contended that the exemption under Sr. No. 90, attracting a nil rate of duty, is not unconditional, and therefore, the demand for cenvat credit based on this was not sustainable.

3. Tribunal's Analysis:
Upon careful consideration, the Tribunal examined both exemption entries and concluded that both entries are conditional, allowing either a nil rate of duty or a 4% duty rate. The Tribunal noted that since both exemptions have conditions, the appellant had the legal option to choose either. Citing a previous decision, the Tribunal emphasized that the appellant correctly availed the exemption under Sr. No. 91, making them entitled to the cenvat credit under the Cenvat Credit Rules, 2004.

Conclusion:
Based on the above observations and the precedent set by the previous decision, the Tribunal held that the appellant's choice to avail the exemption under Sr. No. 91 was legal and correct. Consequently, the impugned order disallowing the cenvat credit was deemed unsustainable and set aside, allowing the appeal in favor of the appellant.

(Separate Judgment by Judges: Not Applicable)