2017 (8) TMI 515 - AT - Central Excise

Tribunal Upholds Order Denying Appeal: Rule 11(2) Violation Results in Credit Inadmissibility

M/s. Colortek Paints India (P) Ltd Versus Commissioner of Central Excise and Service Tax, Mangalore

M/s. Colortek Paints India (P) Ltd Versus Commissioner of Central Excise and Service Tax, Mangalore - TMI Issues:Appeal against rejection of exemption availed under Notification No.8/2003 for manufacturers of paints under Chapter 32 of Central Excise Tariff Act, 1985. Disallowance and demand of wrongly taken CENVAT credit along with interest and penalties under Rule 15 of CENVAT Credit Rules, 2004.Analysis:The appeal challenged the order rejecting the appellant's claim for exemption under Notification No.8/2003 as manufacturers of paints. The appellants crossed the exemption limit during July 2005, leading to the payment of full duty and availing credit on inputs. The dispute arose when the department observed credit taken during August 2005 for inputs received in the previous year, 2004-05. The adjudicating authority disallowed the credit of &8377; 39,325/-, imposed interest, and penalty under Rule 15 of CENVAT Credit Rules, 2004. The Commissioner (A) upheld this decision, prompting the present appeal.The appellant contended that the impugned order was legally unsustainable, emphasizing the eligibility to avail credit on inputs received while paying duty on final products. They argued that the credit was availed in the subsequent financial year due to oversight, with no time limit specified under CCR for credit availment. Legal precedents were cited to support this argument. Additionally, they asserted that the credit, once eligible, could be utilized at any time during duty payment, citing relevant case law.On the contrary, the learned AR defended the impugned order, citing Rule 11(2) of CCR, 2004. Referring to a Tribunal's decision on a similar issue, the AR supported the Commissioner (A)'s decision. After considering both parties' submissions and the record, the Tribunal found that the appellant violated Rule 11(2) of CCR. The Commissioner (A)'s reasoning, highlighted in the order, emphasized that the credit pertaining to the previous year lapsed due to opting for SSI exemption, making its availment in the subsequent year impermissible. The tribunal concurred with the Commissioner (A)'s decision, upholding the rejection of the appellant's appeal.In conclusion, the Tribunal upheld the impugned order, dismissing the appellant's appeal based on the Commissioner (A)'s findings and the precedent set by a previous Tribunal decision on a similar issue. The decision was based on the violation of Rule 11(2) of CCR, 2004, and the inadmissibility of credit availment in the subsequent year due to lapsing provisions linked to opting for SSI exemption.End of Analysis