2021 (9) TMI 353 - AT - Central Excise

Tribunal rules in favor of appellant on Cenvat credit issue, setting aside duty demand

The Tribunal held that the appellant, despite availing Cenvat credit on capital goods, did not breach the exemption notification as they had not utilized ... CENVAT Credit - credit availed on capital goods but not utilized and maintained in the credit balance - reversal of the amount on being pointed out - applicability of exemption N/N. 30/2004-CE - HELD THAT:- Since the credit was availed but the same was reversed before utilization, it will amount to non-availment of credit as held by Hon’ble Gujarat High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS ASHIMA DYECOT LTD. [2008 (9) TMI 87 - HIGH COURT GUJARAT] and maintained by Hon’ble Supreme Court reported in [2009 (3) TMI 975 - SC ORDER]. Appeal allowed - decided in favor of appellant. Issues:- Entitlement for exemption under Notification No. 30/2004-CE.Analysis:The case involved the question of whether the appellant was entitled to exemption under Notification No. 30/2004-CE despite availing Cenvat credit on capital goods but not utilizing it. The appellant reversed the credit balance before the issuance of a show cause notice. The Revenue alleged a breach of the exemption notification due to the availed credit, leading to a demand for excise duty.The appellant argued that since the credit was reversed without utilization, it did not amount to availing the credit, thus no breach of the exemption notification occurred. They cited a previous Tribunal order in their own case where a similar issue was resolved in their favor. The Revenue, represented by the Superintendent (AR), reiterated the findings of the impugned order.Upon careful consideration, the Tribunal noted that the appellant had indeed availed Cenvat credit on capital goods but had not utilized it for duty payment, maintaining the credit balance. The appellant reversed the credit upon the Revenue's pointing out, which the Tribunal deemed as non-availment of credit. The Tribunal referenced legal precedents from the Gujarat High Court and the Supreme Court to support this conclusion. Additionally, the Tribunal highlighted its previous decision in the appellant's case where a similar issue was resolved in favor of the appellant, setting a precedent for the current case.Based on the legal analysis and precedents, the Tribunal concluded that the demand for duty, interest, and penalty could not be sustained. Therefore, the impugned order was set aside, and the appeal by the appellant was allowed. The Tribunal emphasized that the issue was no longer res-integra in light of its previous decision, leading to the reversal of the impugned order and the allowance of the appeal.