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TMI Blog2018 (4) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.03.2003 had been given based on the quantum, and once the Unit exceeds the quantum, it will automatically lose the exemption facility and again, if it comes back within the quantum, it can start seeking exemption - admittedly, in February and March 2006, the assessee was not in the zone of SSI exemption and therefore, it started to pay the excise duty. For the SSI Unit claiming exemption, if at all any Cenvat credit claimed, the same is reversable during the exemption period. The fact remains that as per the stock available based on the Stock Register and other documents, which were verified by the revenue that, on closing of stock of 400.85 MTS contains 72.46MTS of import scraps on which Cenvat credit was availed and therefore, from 01.04.2006, since the assessee has become once again eligible to get exemption under SSI exemption notification, naturally, the assessee has to be subjected to Cenvat credit reversal, as the stock lying as on 31.03.2006 unutilized, certainly, would go for manufacturing or utilisation beyond the date. The Cenvat credit availed by the assessee, even during the period from February to March 2006, insofar as the lying stock as on 31.03.2006 is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2006 and 13.02.2006, respectively. 7.All these credits were availed by the assessee before 31.03.2006. Therefore, he would be entitled to avail Cenvat credit in terms of Rule 3(2) of Cenvat Credit Rules, 2004. 8.It is the further case of the assessee that, the Audit Wing of the Central Excise Department verified the records and documents of the assessee on 29.02.2006 and on 30.03.2006. Based on such verification and scrutiny, they had given a Report No.41/2005-2006, wherein it was pointed out that there was non-reversal of Cenvat credit available on the stock as on 31.03.2005 and worked out the amount payable and the said amount had been paid by the assessee on 05.04.2006. 9.It is the further case of the assessee that subsequently, the Preventive Wing Officials of the revenue visited the factory of the assessee on 22.12.2006, basing on their report and the allegation of wrong availment of Cenvat credit, the Revenue issued a show cause notice as referred to above, on 28.03.2007. 10.It is the further case of the assessee that prior to the issuance of show cause notice, the assessee paid the said sum pointed out by the Audit Wing of the revenue on 05.04.2006 itself, relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat Credit Rules, 2004 and that the provisions of Rule 11(2) of Cenvat Credit Rules, 2004 would not apply? (c)Whether while demanding the duty on the inputs/finished products lying in stock during the exemption period, allowance to the duty credit on imported inputs/inputs contained in the finished goods lying in stock during the dutiable period can be given or not under Rule 11(2) of Cenvat Credit Rules, 2004? (d)Whether the limitation for issue of show cause notice to be reckoned from the date of utilization of credit or the financial year?" 17.Mr.K.Jayachandran, learned counsel appearing for the appellant/assessee would submit that, though show cause notice was issued and Order-in-Original was passed with regard to the duty in respect of the years 2004-2005 and 2005-2006, the Commissioner (Appeals) set aside the Orders in respect of both the years, but insofar as the year 2004-2005 is concerned, on the ground of limitation, and set aside the order of demand passed by the Authority in Original, for the year 2005-2006 on merits. However, the Department had not preferred any appeal against the order passed by the Appellate Authority before the CESTAT, insofar as the order, set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e against the order of the Commissioner (Appeals). 22.Per contra, Mr.A.P.Srinivas, learned Standing Counsel appearing for the revenue would submit that, the assessee had been in the process of manufacturing steel products. Being a SSI Unit, it availed the benefit conferred under the SSI exemption Notification No.8/2003-C-E, dated 01.03.2003 as amended from time to time, since its inception. 23.Learned Standing Counsel appearing for the revenue would further submit, that Rule 6 of the Cenvat Credit Rules, 2004, should be read with Rule 3. The SSI exemption provided under the notification would be based on the quantum basis of the products and once the SSI Unit, like the assessee, crossed the exemption limit, certainly, it has to pay the duty. Here in the case in hand, admittedly, since the assessee crossed the exemption limit in January 2006, it is an admitted fact that during February and March 2006, the assessee was not in the category of SSI Unit, availing the benefit under the notification and therefore, it has to pay the duty. 24.The learned Standing Counsel would further submit that, the issue before this Court in the appeal, is to testify as to whether the demand of duty e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y equivalent to the Cenvat credit availed by the assessee on the finished goods and inputs lying on stock as on 31.03.2006 was correct, as they have admittedly availed the SSI exemption Notification No.8 of 2003 dated 01.03.2003. 30.The admitted facts need not be controverted. Accordingly, the assessee is the steel manufacturing unit and it claimed exemption under Notification No.8 of 2013 dated 01.03.2003 as amended every year, from its inception. Though a show cause notice was issued and a demand was made and the proposal was confirmed by the Original Authority for the years 2004-2005 and 2005-2006, the Appellate Commissioner set aside the demand for both the years, but insofar as 2004-2005 is concerned, on the ground of limitation, as against which, since no appeal was filed by the revenue before the CESTAT, the only issue, which was decided by the CESTAT, was with regard to the demand of duty, on the basis of the reversal of the Cenvat credit for the finished goods and inputs lying in stock as on 31.03.2006. 31.In order to meet this point on the side of the revenue, we must look into the order impugned, which originally emanated from the show cause notice, dated 28.03.2007. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OB Product ion Issued CB Remarks Apr. 2005 to Jan. 2006 552.465 624.415 449.73 727.15 Exempted Period Feb.2006 to March 2006 727.15 106.125 109.455 723.82 Dutiable Period Mis Rolls Qty.in MTS. Period OB Product ion Issued CB Remarks Apr. 2005 to Jan. 2006 14.615 26.11 29.4 11.325 Exempted Period Feb.2006 to March 2006 11.325 4.39 8.3 7.415 Dutiable Period It is seen that out of the closing balance 723.82 MTS of finished goods as on 31.03.2006, the quantity produced during Feb 2006 & March 2006 after the assessee started paying full rate of duty is 106.125 MTS of finished goods and 4.39 MTS of Misrolls, in which as seen from the tables of imported scrap & 90.87 MTS of Cenvat Scrap has been utilized towards manufacture of the same. It is noticed that 20.06 MTS of imported scrap has come from the existing closing balance of 31st Jan 2006 of 348.99 MTS on which cenvat credit has not been availed by the assessee. However, the stock of 90.87 MTS has been procured afresh on which credit has been availed by the assessee. Hence, 90.87 MTS is the cenvat availed scraps contained in the finished goods, were available with the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), he had come to a conclusion that the show cause notice dated 28.03.2007 was issued invoking the extended period, alleging suppression of fact, which was not correct and therefore, the demand relating to the period 2004-2005 was time barred by limitation and unsustainable. 33.Against the said finding, since no appeal was filed before the CESTAT, there was no quarrel with regard to the year 2004-2005. Insofar as the year 2005-2006 is concerned, the revenue's contention was that, even though the assessee crossed the limit for claiming exemption under SSI notification in January 2006 and started paying the duty on the clearances for February and March 2006, it was found by the revenue, on perusal of the records and Stock Registers, there had been stock lying at the assessee's premises/factory as on 31.03.2006 and only based on such a factual finding and assessment, the reversal of Cenvat credit was sought for and therefore, there can be no quarrel in the line of proceeding issued by the revenue to claim the unpaid duty or short paid duty by reversing the wrongly availed Cenvat credit either during the exemption period or for the stocks available as on 31.03.2006, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods. We agree with the findings in the impugned order that the decision in Premier Tyres Ltd., and consequently devision in Ashok Iron and Steel case, is not applicable as these decisions were passed on the ground that there was no provision for reversal of credit. Now there is a specific provision in Rule 57AD which clearly provides that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods. Rule 57AH contains the provision for the recovery of Cenvat credit utilized wrongly. As the inputs have been utilized in the manufacture of wholly exempted goods credit taken in respect of such inputs is recoverable. The demand is not hit by the time limit as the recovery is related in the instant matter to utilization of inputs for manufacture of exempted goods. As the show cause notice has been issued within one year of such utilization, demand is within the time limit specified in the Act and Rules. We are, however, of the view that in the facts and circumstances of the case, no penalty is imposable on the Appellants. We order acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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