2016 (12) TMI 649 - AT - Central Excise

Tribunal grants appellant benefit of exemption under Notification No. 30/2004

The Tribunal ruled in favor of the appellant, stating that the appellant's reversal of CENVAT Credit on inputs at the time of clearance of finished goods ... Whether the appellant should reverse the CENVAT Credit contained in the stock lying in factory on 9.7.2004 i.e. from the date appellant opted for exemption under Notification No. 30/2004 dated 9.7.2004 or otherwise? - Held that: - the appellant had availed CENVAT Credit on the inputs but reversed the attributable CENVAT Credit on the inputs of the finished goods when they were cleared without payment of duty under Notification No. 30/2004. There is no dispute that the appellant is eligible to avail benefit of Notification No. 30/2004. The only dispute is that the said notification has a condition which mandates for non availment of CENVAT Credit of the inputs by the assessee it he opts for such exemption notification. Since appellant has reversed the CENVAT Credit on the inputs attributable to the finished goods cleared by him availing he benefit of Notification No. 30/2004, I find that the exemptions cannot be denied. I find that the CENVAT Credit reversed need not be immediate, as correctly pointed out by the learned Counsel that the issue is now squarely settled by the judgment of the Tribunal in the case of Omkar Textile Mills [2013 (10) TMI 1298 - CESTAT AHMEDABAD]. Appeal allowed - decided in favor of appellant. Issues involved:1. Whether the appellant should reverse the CENVAT Credit contained in the stock after opting for exemption under Notification No. 30/2004.2. Whether the appellant's reversal of credit at the time of clearance of finished goods allows for the benefit of Notification No. 30/2004.3. Whether demands raised by invoking the extended period are time-barred based on the debiting of CENVAT credit account in the ER-1 returns.Analysis:1. The primary issue in this case revolved around whether the appellant was required to reverse the CENVAT Credit in the stock after opting for exemption under Notification No. 30/2004. The appellant had availed the CENVAT Credit on inputs but reversed the credit on the finished goods cleared under the said notification. The Tribunal noted that the appellant had complied with the conditions of the notification by reversing the credit on the inputs attributable to the finished goods. The Tribunal referenced a similar case and held that such reversal of credit at the time of clearance of finished goods amounted to non-availment of CENVAT Credit, making the benefit of the notification available to the appellant.2. The second issue addressed whether the appellant's reversal of credit during the clearance of finished goods allowed for the benefit of Notification No. 30/2004. The Tribunal examined the records and found that the appellant had reversed the CENVAT Credit on the inputs when clearing finished goods under the notification. The Tribunal emphasized that the appellant was eligible for the benefits of the notification as the conditions were met. The Tribunal cited a previous case to support the appellant's position and concluded that the exemptions could not be denied based on the credit reversal done by the appellant.3. Lastly, the issue of demands raised by invoking the extended period was analyzed in the context of the debiting of the CENVAT credit account in the ER-1 returns. The Tribunal observed that the debiting of the CENVAT credit account was known to the Department through the filed returns. The Tribunal found that since the quantum of credit reversal was never questioned by the Revenue and the appellants had declared the reversal, there was no suppression on the appellants' part to evade duty. Consequently, the Tribunal held that the extended period of demand was not applicable, and the show cause notices were deemed time-barred.In conclusion, the Tribunal held that the impugned order was not sustainable, setting it aside and allowing the appeal in favor of the appellant.