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TMI Blog2008 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... was not availed and would thus satisfy the condition of Notification No.30/2004-CE dated 09.07.2004? (b) Whether the Tribunal is justified in rendering the present judgment and order in view of explanation to Rule 3 of Cenvat Credit Rules, 2004 and whether the credit availed of by the respondent under the said Rules and reversal would amount to non-fulfillment of the condition prescribed under Notification No. 30/2004-CE dated 09.07.2004? Same questions of law are framed in all the three tax appeals. As a matter of fact, all the three Tax Appeals arose out of the common order passed by the Customs Excise Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in Appeal Nos. E/4101/05, E/328/2006 and E/71/07 dated 16.4.2007/A-836-838/WZB/A'bad-07. 2. For the sake of brevity and convenience, the facts are taken from Tax Appeal No.1032 of 2007. The respondent-assessee is engaged in the business of manufacture of cotton fabrics falling under Chapter 52 of the Central Excise Tariff Act, 1985. The respondent uses grey cotton, dyes, chemicals, packing material, etc. as inputs for manufacture of cotton fabrics and is availing benefit of Notification Nos. 29/2004 and 30/2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods availing of Notification No.30/2004-CE dated 09.07.2004. 2.4 A bare perusal of the second Notification No.30/2004-CE makes it clear that it is very specific about non-availment of Cenvat credit on inputs stage for availing duty exemption conferred thereunder. In other words, the benefit of the said notification can be availed of only if there is non-availment of cenvat credit on input stage by an assessee. 2.5 The Board (CBEC) had further clarified that both the notifications are independent and there is no restriction of availing the benefit conferred on both of them simultaneously provided separate books of accounts are maintained as is stated hereinabove. 2.6 The scrutiny of ER-1 returns submitted by the respondent for the period from February-2005 to November-2005 revealed that the respondent had started availing of benefits under both the notifications simultaneously with effect from February-2005. Prior to February-2005, the respondent was clearing goods on payment of applicable duty under Notification No.29/2004-CE dated 09.07.2004. It was noticed that the respondent had started availing benefit of both the notifications simultaneously. However, the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly provided that no cenvat credit can be availed on the goods cleared without payment of duty in view of the provisions of the Cenvat Credit Rules, 2001 and therefore, availing cenvat credit first and subsequent proportionate reversal disentitles the respondent from the availment of the benefit or exemption under the second Notification No.30/2004-CE dated 09.07.2004. The statement of the concerned person of the respondent was recorded under Section 14. In the said statement, there was an admission of the duty amount calculated and was shown as annexure. 2.8 On scrutiny of ER-1 return submitted by the respondent for the period from February-2005 to December-2005 and the details available for the period from 01.01.2006 to 17.01.2006, it appears that the respondent had cleared quantity of fabrics of 4,40,15,136 mtrs. And 5,013 kgs. of processed fabrics valued at Rs.88,09,49,089/- for availing benefit of Notification No. 30/2004 dated 09.07.2004 and by reversing the duty to the tune of Rs.45,28,982/- (basic Rs.44,40,902/- + Education Cess Rs.88,080/-). These goods were cleared without maintaining separate books of accounts and thus, there was contravention of Notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. Being aggrieved by the said order of the Tribunal, the present Tax Appeals have been filed by the Revenue. 3. In Tax Appeal No.1640 of 2007, this Court has passed an order on 4th February, 28 directing the learned Counsel appearing for the Revenue to place on record the facts as to whether the order of the Tribunal on the same issue which was in favour of some other assessee was accepted or not finally by the Department. Till this date, nothing has been placed before the Court. In the above view of the matter, all the three appeals are taken up for admission hearing. 4. Mr. Y. N. Ravani, learned Standing Counsel appearing for the Revenue, has submitted that the Tribunal has referred to and relied upon the decision of the Honourable Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. (supra), however, the facts are clearly distinguishable and the relevant notification which is under consideration in the present appeals was not before the Honourable Supreme Court and hence, the said decision cannot be made applicable to the facts of the present case. He has further submitted that there is certain principle of law that when a notification is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. Though there is not much discussion in the order of the Tribunal, the learned Commissioner of Central Excise, has discussed the entire issue at great length. After discussing about the relevant provisions contained in the notifications, rules and submissions of the assessee's representative, the Commissioner of Central Excise has decided the matter against the assessee only on the ground that manufacturer had not maintained separate books of accounts for the goods availing of the benefit of Notification No.29 of 2004 and for the goods availing of the benefit of Notification No.30 of 2004. He has further observed that the circular does not speak of final goods or inputs, but, it refers to the goods only and then, he came to the conclusion that as the subjected two notifications refer to the aspect of credit being taken or otherwise of inputs, maintenance of separate accounts for inputs is of prime importance. Since this condition was not satisfied, he confirmed the levy of duty, penalty, etc. This finding of the learned Commissioner of Central Excise is not in consonance with the observations made and the ratio laid down by the Honourable Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely:- (a) if the exempted goods are - (i) xxx xxx xxx xxx (ii) xxx xxx xxx xxx (iii) xxx xxx xxx xxx (iv) xxx xxx xxx xxx (v) xxx xxx xxx xxx (vi) final products falling within Chapter 50 to 63 of the said First Schedule; xxx xxx xxx xxx xxx xxx xxx xxx Even otherwise, Rule 3 says that the manufacturer or producer of the final product or provider of output services shall be allowed to take credit on various items enumerated therein. This issue had come up for consideration before the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. vs. Union of India, reported in 2004 (174) E.L.T. 422 (All.), wherein it is held that reversal of modvat credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunal's stage. While arriving at this conclusion, the Allahabad High Court has referred to various judgments under which such r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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