2023 (3) TMI 1365 - AT - Central Excise

Tribunal grants duty credit appeal, allows concessional rate, emphasizes lawful credit availed.

M/s. Parasakthi Fire Works Industries Versus Commissioner of GST & Central Excise, Tirunelveli

M/s. Parasakthi Fire Works Industries Versus Commissioner of GST & Central Excise, Tirunelveli - TMI Issues: The issues involved in the judgment are whether the appellant is eligible to avail the credit of duty paid on inputs purchased from principal manufacturers who paid duty at a concessional rate under Notification No.4/2006-CE, and whether the principal manufacturers were required to avail full exemption under the same notification.Comprehensive Details:1. Issue 1 - Eligibility of Credit for Duty Paid on Inputs:The appellants, engaged in manufacturing safety matches and fireworks, purchased paper from a principal manufacturer who paid duty at a concessional rate of 4%. The department contended that the principal manufacturer should have availed full exemption under Notification No.4/2006-CE and not paid 4% duty. The original authority denied the credit availed by the appellants, which was confirmed on appeal by the Commissioner (Appeals). The appellants argued that the exemption under Sl.No.90 of the notification is conditional, and since the principal manufacturer paid duty without availing full exemption, the credit availed by the appellants is lawful. They cited previous Tribunal decisions supporting their position.2. Issue 2 - Requirement of Full Exemption by Principal Manufacturers:The department alleged that the principal manufacturers should have availed full exemption under Notification No.4/2006-CE and not cleared goods paying concessional duty at 4%. The Tribunal referred to previous cases where it was held that under the notification, Sl.No.90 with a 'Nil' rate of duty is controlled by condition No.10, while Sl.No.91 with a 4% tax rate is controlled by condition No.11. The Tribunal concluded that it is not mandatory for principal manufacturers to avail the 'Nil' rate of duty at Sl.No.90 and that they have the option to pay duty at the concessional rate of 4%.3. Final Decision:Considering the facts and precedents, the Tribunal allowed the appeal, setting aside the impugned order. The Tribunal held that the demand for denying credit cannot be sustained based on the previous decisions and allowed the appeal with consequential relief, if any.This judgment clarifies the eligibility of the appellant to avail credit for duty paid on inputs purchased from principal manufacturers who paid duty at a concessional rate, and the requirement for principal manufacturers to avail full exemption under Notification No.4/2006-CE. The Tribunal's decision was based on the interpretation of the conditions specified in the notification and previous Tribunal rulings on similar issues.