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TMI Blog2022 (1) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... be utilized - The case of the appellant is covered by rule 11(3) (i) therefore, the remaining credit shall not lapse. One of the contention by the adjudicating authority is that even though the argument of the appellant that the Cenvat credit balance will lapse as per Rule 11(3) only, the product is exempted absolutely is accepted there is no dispute that Notification No. 30/2004-CE has been issued under section 5A of the Central Excise Act, 1944 and the appellants having opted for the same, cannot escape from the obligation relating reversal of balance Cenvat Credit. There is a clear distinction between an absolute exemption and conditional exemption. Therefore, the contention of the adjudicating authority that since the exemption notification was issued under section 5A the appellant is otherwise required to pay balance credit is of no substance and has no basis. The issue has been considered by the tribunal time and again and after interpreting Rule 11(3) (i) and (ii) came to conclusion that in case of conditional notification the assessee is not required to lapse the remaining credit after reversal on input as such, input in process and input contained in finished goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant utilized the fresh credit on the input received after September-2011 as well as a portion of balance Cenvat credit for payment of excise duty on the finished goods cleared under notification no. 29/2004-CE dated 09.07.2004. The total amount of credit utilized for excise duty on finished goods ₹ 44,44,791/- included payment of excise duty on finished goods cleared for export during the period from September-2011 to June-2013 amount of ₹ 34,71,098/-. 1.2 In the above factual background a show cause notice dated 22.01.2014 came to be issued proposing recovery of Cenvat credit amounting to ₹ 1,5714,851/- on the ground that same has lapsed as per Rule 11 (3) of the Cenvat Credit Rules, 2004 and demanding of ₹ 44,44,791/- under Rule 14 of the Cenvat credit rules read with Section 11A (4) of Central Excise Act, 1944 alleging that the appellants wrongly utilized lapsed credit for payment of duty. 1.3 The aforesaid show cause notice was adjudicated by the Learned Commissioner of Central Excise vide impugned order dated 21.05.2015 wherein the demands have been confirmed and penalty of equivalent amount has been imposed. The contention of the Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods cleared during the period from September-2011 to June-2013 hence, the impugned order is liable to be set aside. He further submits that there was no suppression of facts by the appellant and hence the demand is barred by limitation provided under section 11A of the Central Excise Act. The department was aware of the finished goods manufactured and the exemption notifications availed in respect of the same during the period in question. Further, the department was aware of the fact that the appellant s were not taking Cenvat credit on the inputs used in manufacture of the finished goods cleared during the period from 01.04.2007 to August-2011 and that the credit balance as on 31.03.2007 after adjustment of the credit involved in the inputs lying in stocks, inputs contained in WIP and finished goods was being shown in the Cenvat credit accounts. There is no requirement of giving any other details other than the details furnished by the appellant s in the returns filed by them. 2.2 The appellant s were also filing monthly returns along with Cenvat details with the departmental authorities from time to time in which the fact that they had been availing the nil rate of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of balance cenvat credit is provided. In the present case undisputedly the appellant have availed the benefit of Notification No 30/2004-CE which is a conditional one and the said condition prescribed is provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs has been taken under the provision of the Cenvat Credit Rules, 2002 . 4.1 Since the Notification No. 30/2004-CE dated 09.04.2007 contains the above condition the notification is not absolutely therefore, the situation of the appellant is covered under Rule 11(3)(i) according to which the appellant is required to pay an amount equivalent to Cenvat Credit, if any taken by him in respect of inputs received for used in the manufacture of said final product and is lying in stock or in process or is contained in the final product or lying in stock but if the Notification is absolutely having no condition in terms of Rule 11(3)(ii) the remaining credit shall lapse and shall not be allowed to be utilized. The case of the appellant is covered by rule 11(3) (i) therefore, the remaining credit shall not lapse. One of the contention by the adjudicating authority is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the adjudicating authority that since the exemption notification was issued under section 5A the appellant is otherwise required to pay balance credit is of no substance and has no basis. 4.2 We find that this issue has been considered by the tribunal time and again and after interpreting Rule 11(3) (i) and (ii) came to conclusion that in case of conditional notification the assessee is not required to lapse the remaining credit after reversal on input as such, input in process and input contained in finished goods. The relevant judgments are reproduced below:- CCE Vs. Orient Syntex- 2020 (40) GSTL 56 (T) 5 . We find that there is no dispute on the fact that the respondent has opted for exemption Notification No. 30/2004-C.E., which carries the following conditions :- Provided that nothing contained in this Notification, which shall apply to the goods in respect of which credit of duty on inputs has been taken under the provisions of Cenvat Credit Rules, 2004. 6 . As per the above condition, the exemption Notification No. 30/2004-C.E. is not an absolute exemption. The provision for lapsing of credit is provided in Rule 11(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit utilised by him for clearance of finished goods or capital goods. We also find that on similar issues in the case of Wearit Global Ltd. - 2018 (8) TMI 1094-CESTAT, Janson Textile Processors - 2018 (7) TMI 850-CESTAT-Chennai and Sitaram India Ltd. - 2018 (10) TMI 11-CESTAT-New Delhi, the credit stands allowed to the manufacturer. 7. We, therefore, allow the appeals filed by both the Appellants with consequential reliefs, if any. Revenue s appeal being involved the amount less than ₹ 20 Lacs is dismissed on the ground of Government s litigation policy instruction F.No. 390/Misc/116/2017-JC, dated 11-7-2018. 7.2 In the case of Kanchan India Ltd. (supra), the Co-ordinate Bench of CESTAT, Delhi has taken the following view :- 6. After going through the impugned order and appeal papers, we are of the considered [view] that similar view has been taken by the various coordinate benches, which is as under : 3. Ld. Advocate for the appellant while relying upon the decision of Jansons Textile Processors v. Commissioner, Central Excise ST Salem - 2018 (7) TMI 850 (CESTAT), Chennai has submitted that the present case is squarely covered under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported. 5.2 It is pertinent to note that the sub-rule 3(i) and sub-rule 3(ii) are separated by a semicolon (;) followed by the disjunctive, or . The use of semicolon (;), the punctuation mark is to separate two closely related independent clauses, or is a particle used to connect words, phrases or classes representing alternatives [J. Jayalalitha v. UOI - (1999) 5 SCC 138]. Only if the phrasing of the legal provision is such that in actuality and is intended, should it be examined whether the alternatives separated by or are not mutually exclusive. The Courts may construe or as and , only if they find from the context that the wrong word must have been used. [Ranchhoddas Atmaram v. UOI, AIR 1961 SC 935; Firoj Farukee v. State of West Bengal, AIR 1972 SC 2141] . However, in respect of the sub-rule 3(i) and sub-rule 3(ii) ibid, there should not be any such confusion or doubt, since those two sub-rules are separated not by just a particle or but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished. The impugned order is upheld and the Revenue s appeal is dismissed. Jansons Textile Processors v. Commissioner -2018 (7) TMI 850- (T) 5.1 The core issue that comes up for decision is whether the transitional provisions contained in sub-rule (3) of Rule 11 will be applicable to both sub-rule 3 (i) and 3 (ii). For better understanding, the relevant provisions relating to manufacturers are reproduced under : RULE:-11.Tansitional provision .... .... ..... (3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the finalproduct lying in stock, if, - (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or (ii)the said final product has been exempted absolutely under section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further to do. On the other hand, sub-rule (3) (ii) ibid will cover the situation where the said final product has been exempted absolutely under Section 5A ibid. 5.5 Sub-rule (3) (i) ibid will apply when the assessee opts for an exemption from the whole of duty of excise leviable under a notification issued under Section 5A of the Central Excise Act, 1944. Sub-rule (3) (ii) ibid will be attracted only to those assessees who are confronted with absolute exemption in respect of final product/s manufactured by them, in which case the entire balance of cenvat credit lying in his account shall lapse and the same shall not be allowed to be utilized for payment of duty for home consumption or for export. 5.6 Hence, in sub rule 3 (i) ibid, the assessee has to opt for the exemption whereas in sub-rule 3 (ii) ibid, there is no such option available to the assessee and the absolute exemption that may have been brought forth under Section 5A ibid would apply unilaterally to the related final product manufactured by the assessee. 5.7 It is important to note that the law makers have not incorporated the requirement of payment of cenvat credit equivalent to credit taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the appeals filed by Revenue are rejected. Wearit Global Ltd Vs CCE-2018(8) TMI 1094 CESTAT NEW DELHI 5. After hearing both the parties, we are of the opinion that in the present case the appellant has opted for exemption as per the Notification No. 30/2004-CE where the exemption is conditional. As per Rule 11 (3)(ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No. 30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11 (3)(i) of CCR would apply which does not mandate any such lapsing. 6. We draw our support from the decision of CESTAT-Chennai in the case of Janson Textile Processors Vs. Commissioner of Central Excise ST Salem wherein it was held as follows:- 5.1 The core issue that comes up for decision is whether the transitional provisions contained in sub-rule (3) of Rule 11 will be applicable to both sub-rules 3 (i) and 3 (ii). For better understanding, the relevant provisions relating to manufacturers are reproduced as under: RULE11.Transitionalprovision. .... .... ..... (3) A manufacturer or producer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 3 (i) and 3 (ii) to be two distinct and separate alternatives, with distinctively different qualifying factors and conditionalities. 5.4 In sub rule 3 (i), the assessee has an option to avail of a particular notification or otherwise; when such assessee takes such option, he will be required to pay an amount equivalent to cenvat credit, if any, ..................... 6. In the event, the findings and decision of the lower appellate authority to the contrary in the impugned order is not on sound legal footing. The impugned order then cannot sustain and will require to be set aside, which we hereby do. Appeal is allowed with consequential benefits, if any, as per law. 7. Following these 2 decisions and indulging the facts at length, we are of the considered opinion that the ratio laid down in the judgments are squarely applicable in this case and therefore, we allow the appeal. From the above it can be seen that on the absolute identical issue involving the exemption notification 30/2004-CE the tribunal in various judgments held that balance credit shall not lapse in terms of Rule 11(3) of Cenvat Credit Rules, 2004 therefore the issue is no longer res-integ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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