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TMI Blog2010 (2) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, J. REPRESENTED BY : Shri N.V.T.D. Prasad, Deputy Commissioner, for the Appellant. Shri K. Vijay Kumar, Advocate, for the Respondent. [Order]. These four revision applications have been filed by Commissioner of Customs Central Excise, Hyderabad-III against the orders-in-appeal No. 7 to 10/2007(H-III) C.E. (D), dated 21-11-2007 passed by the Commissioner of Customs and Central Excise (Appeals-Ill), Hyderabad. 2. Brief facts of the cases are that the respondents are the manufacturers of cotton yarn and blended polyester/viscose yarn falling under Chapters 52 and 55 respectively of the Central Excise Tariff Act, 1985. They clear the cotton yarn for home consumption without payment of duty under Notification No. 30/2004-C.E. (N.T.), dated 9-7-2004, while they clear the polyester/viscose/blended yarn on payment of duty following Notification No. 29/2004-C.E., dated 9-7-2004. However, while exporting the goods i.e. cotton yarn as well as polyester/viscose yarn, they pay Central Excise Duty and claim rebate of duty paid. For the exports so undertaken by them they had filed rebate claims. After scrutiny of the claims Asstt. Commissioner, Hyderabad-J Division sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the appeal of the department and upheld the orders-in-original on the ground that as per Rule 3(4)(a) of Cenvat credit Rules, 2004, the Cenvat credit may be utilized for payment of duty on any final product and the respondent have complied with all the conditions of the C.B.E.C. Circular No. 795/28/2004-CX., dated 28-7-04. 3. Aggrieved by this order-in-appeal, the Commissioner has filed these revision applications on the following grounds : 3.1 The Commissioner (Appeal) proceeded on a wrong premise that department objection is only that the credit of duty accrued on inputs should not be utilized for payment of duty on finished products in which the said inputs are not utilized and proceeded to interpret the Rule 3(4)(a) of Cenvat credit Rules, 2004. Whereas the main issue is not the one emphasized by Commissioner (A) but it is a simple issue whether assessee can clear the goods for home consumption under NIL rate of duty and the goods cleared for export on payment of duty simultaneously, so as to utilize the Cenvat credit lying in balance which is nothing but financial accommodation to avail rebate. 3.2 Assessee manufactures cotton yarn blended cotton yarn, from the input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, once he opted for NIL rate of duty under Notification No. 30/2004, he cannot avail Cenvat credit and accordingly not eligible for any refund. 3.9 The issue relating to the maintaining of separate accounts by the assessee wrt dutiable and non-dutiable goods is also an intrinsic part of issue as non-availment of credit of duty is a pre-condition for availing notification 30/2004 thus it is mandatory to maintain separate account as prescribed in the Circular No. 795/28/2004-CX., dated 28-7-2004 and 845/3/2007-CX., dated 1-2-2007. 3.10 Further the Commissioner (Appeals) has straightaway brought the submission of the assessee that they are maintaining separate accounts but he has failed to take cognizance of the fact that the appeal is a result of observation/investigation by the departmental officers that the assessees are not maintaining separate account of inputs used in manufacture of non-dutiable goods and dutiable goods which is mandatory. Commissioner (Appeal) has not verified the veracity of the submissions made by the assessee. 4. A notice under Section 35EE of Central Excise Act, 1944 was issued to the respondent who filed their counter reply vide their le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit for one class of inputs and prohibition of such accrued credit from using to pay duty on another final product. While reviewing the rebate orders, the department had imported words which were not used in either Cenvat credit Rules, 2004 or Central Excise Rules which was rightly rejected by the Commissioner (Appeals). 4.6 With regard to the other ground that Board s circular clarifies that the credit accrued on the inputs used in the export goods should alone be rebated in case the assessee avails simultaneously both the Notifications No. 29/2004-C.E. and 30/2004-C.E., dated 9-7-2004, the department has not cited any circular number or date to examine if any such circular is found in existence or not. Since the department has been referring to the Circular No. 795/28/2004-CX., dated 28-7-2004, the Commissioner (Appeals) even made an attempt to examine the contention of the department and found nothing of that sort in the circular dated 28-7-2004 which stipulate that the credit accrued on the inputs used in the export goods should alone be rebated in case the assessee avails simultaneously both the Notifications Nos. 29/2004-C.E. and 30/2004-C.E. as relied on by the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them without payment of duty for home consumption under notification 30/2004 hence he is not availing duty of credit on inputs. 4.10 This is a matter of fact which has no bearing on the claim of rebate of duty paid on goods exported. Asseeeee also manufactures polyester yarn, viscose yarn and polyester/blended yarn from the polyester/viscose fibre and clears these goods for home consumption on payment of duty under Notification No. 29/2004-C.E. for which the duty has been paid from the Cenvat credit taken on raw material, viz polyester fibre and viscose fibre. This is a matter of fact which has bearing on the claim of rebate of duty paid on goods exported. Assessee also clears these goods for export on payment of duty and claims rebate of such duty. As far as polyester/viscose yarn is concerned, there is no problem as credit of duty is available to them on account of the raw material used therein and these goods otherwise also cleared on payment of duty for home consumption. Whereas with regard to cotton yarn, as the assessee operating under Notification 30/2004, Cenvat credit on raw material is available to them. If he is clearing the goods on payment of duty for export, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty paid on any input or capital goods, or of service tax paid on input service, the provisions of such other rule or notification shall prevail over the provisions of these rules. In the instant case, the issue is grant of rebate on goods cleared for export on payment of duty. It is not a case of extending the benefit of any exemption notification. Even assuming the instant case deals with the exemption on condition of non-availability of credit of duty paid on any inputs or capital goods. This is not the case of the department that the assessee has violated any of the conditions of the notifications by availing credit on the inputs used for manufacture of exempted goods. Therefore the above grounds is irrelevant to the issue on hand. 5. The cases were listed for personal hearing on 26-10-2009, Sh. N.V.T.D. Prasad, Deputy Commissioner appeared on behalf of the applicant Commissioner and reiterated the grounds of revision application. Sh. K. Vijay Kumar, Advocate appeared on behalf of the respondent and reiterated their submissions made in their counter reply dated 30-5-2008. 6. Government has considered the relevant case records, both oral and written submissions of the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification shall prevail over the provisions of these Rules . This will lead to conclusion that for availing any exemption notification 30/2004-C.E., dated 9-7-2004, the conditions of that notification have to be complied with. In other words, Cenvat credit of the inputs utilized for manufacture of the finished goods to be cleared under Notification No. 30/2004-C.E., dated 9-7-2004 is not to be allowed. In the instant case this is not so, as the respondent has not taken any Cenvat credit on the inputs utilized for the manufacture of the finished goods i.e. cotton yarn. They are clearing cotton yarn for domestic clearance free of duty under Notification No. 30/2004-C.E.. At the same time, they are clearing cotton yarn for export on payment of duty under Notification No. 29/2004-C.E. The respondent claiming rebate on the goods cleared under Notification No. 29/2004-C.E., dated 9-7-2004, have not availed any Cenvat credit on the inputs, and have paid duty as per the provisions of Rule 3(4)(a) of the Cenvat credit Rules, 2004. 10. In view of the above discussions and findings, Govt. observes that the respondent has complied with all the conditions of C.B.E. C. Circulars No. 795 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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