2017 (3) TMI 875 - AT - Central Excise

Tribunal rules in favor of assessee on Cenvat credit eligibility under Notification No. 50/2003-CE

Century Pulp & Others Versus CCE Meerut II (Vice-versa)

The Tribunal allowed Appeal No. E/204/2010 filed by the assessee, dismissing Appeal No. E/393/2010 and Appeal No. E/470/2010 filed by the Revenue. The ... CENVAT credit - benefit of N/N. 50/2003 dated 10.06.2003 - denial of credit on the ground that the benefit of notification was availed by the assessee - Held that: - the issue is covered by the Hon'ble Uttrakhand High Court's decision in case of CC&CCE, Meerut-I v. Apco Pharma Ltd. [2011 (10) TMI 38 - UTTARAKHAND HIGH COURT ], where it was held that CENVAT credit which was validly availed at the time of the receipt of the inputs for the manufacture of the final product, on which excise duty was payble, but subsequently utilized for the manufacture of the same final product which became exempted from payment of excise duty pursuant to a subsequent notification, was not liable to be reversed under Rule 6(1) of the CENVAT Credit Rules, 2002 - the appellant assessee will be entitled to the Cenvat credit availed and credited to their Cenvat credit account prior to 03.02.2007, the day when the assessee opted for benefit of the N/N. 50/2003 dated 10.06.2003 - appeal allowed - decided in favor of appellant-assessee. Benefit of N/N. 50/2003 dated 10.06.2003 - denial on the ground that additional production of writing & printing paper was a result of the expanded capacity and not establishment of a new unit - Held that: - the assessee namely M/s Century Pulp and Paper has fulfilled the condition laid down in the N/N. 50/2003-CE dated 10.06.2003 and is eligible for exemption from payment of duty - appeal of department dismissed. Appeal allowed - decided in favor of assessee. Issues Involved:1. Eligibility of the appellant to avail the benefit of Notification No. 50/2003-CE dated 10.06.2003.2. Confirmation of demand of Rs. 98,00,432/- against the appellant under Rule 14 of Cenvat Credit Rules read with Section 11A of the Central Excise Act, 1944.3. Provisional assessment of M/s Century Pulp and Paper at nil rate of duty.Detailed Analysis:Issue 1: Eligibility to Avail the Benefit of Notification No. 50/2003-CEThe primary contention is whether the appellant, Century Pulp and Paper, is eligible for the benefits under Notification No. 50/2003-CE dated 10.06.2003. The appellant expanded its capacity from 1,21,850 MT per annum to 1,97,810 MT per annum, investing approximately Rs. 425 crores. The Revenue argued that this expansion constituted the establishment of a new unit, not a substantial expansion of the existing unit as required by the notification.After careful consideration, the Tribunal found that the expansion was within the same premises and factory compound, thus qualifying as a substantial expansion. The Tribunal referenced the Hon’ble Supreme Court's decision in Bajaj Tempo Ltd. v. Commissioner of Income Tax, which emphasized a liberal interpretation of provisions promoting economic growth. Reports from the Department of Paper Technology, IIT Rourkee, and Central Pulp and Paper Research Institute supported the appellant's claim that the expansion was not a new industrial unit but an expansion of the existing plant.Issue 2: Confirmation of Demand of Rs. 98,00,432/-The appellant was also contesting the confirmation of a demand of Rs. 98,00,432/- along with interest and equivalent penalty under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944. The issue arose from a Show Cause Notice dated 20.02.2008, which alleged that the appellant was liable to reverse Cenvat credit on inputs, semi-finished goods, and finished goods in stock as of 03.02.2007, the date they started availing exemption under Notification No. 50/2003-CE.The Tribunal, referencing multiple judicial decisions including the Hon’ble Uttrakhand High Court's decision in Apco Farm Ltd. and the Hon’ble Supreme Court's decision in Dai Ichi Karkaria’s case, concluded that Cenvat credit validly availed at the time of receipt of inputs for manufacturing dutiable final products does not need to be reversed merely because the final products subsequently became exempt from duty. The Tribunal held that the appellant was entitled to retain the Cenvat credit availed before opting for the exemption.Issue 3: Provisional Assessment at Nil Rate of DutyThe Revenue's appeal against the Order-in-Appeal No. 519 dated 20.01.2011, which upheld the provisional assessment of M/s Century Pulp and Paper at nil rate of duty, was also considered. The Tribunal found no merit in this appeal, reiterating that the appellant fulfilled the conditions laid down in Notification No. 50/2003-CE and was eligible for exemption from duty.Conclusion:- Appeal No. E/204/2010 filed by the assessee is allowed.- Appeal No. E/393/2010 and Appeal No. E/470/2010 filed by the Revenue are dismissed.- The Tribunal set aside the impugned order, affirming the appellant's eligibility for the benefits under Notification No. 50/2003-CE and confirming that the appellant does not need to reverse the Cenvat credit availed before opting for the exemption.[Pronounced in open Court on 15.02.2017]