2022 (5) TMI 1240 - AT - Central Excise

Tribunal Remands Order Due to Compliance Issues, Appellant Prevails on Exemption Conditions

The Tribunal found serious infirmities in the impugned order, remanding the case due to failure to examine the plea of limitation and the appellant's ... Availing CENVAT credit while availing the benefit of exemption N/N. 30/04-CE denied - major input i.e. yarn used for manufacture of exempted and duty paid goods - manufacture of Terry Towels - suppression of material facts or not - invocation of extended period of limitation - HELD THAT:- The issue is squarely covered by the decision of this Tribunal in the case of M/S MANGAL TEXTILE PVT. LTD. VERSUS CCE AHMEDABAD-I [2010 (12) TMI 318 - CESTAT, AHMEDABAD] where it was held that appellant having reversed the major part of the credit and having offered to reverse the balance credit, entitled to benefit of Notification No.30/94. There are no hesitation in allowing the appeal filed by the appellant in this case also - appeal allowed - decided in favor of appellant. Issues:1. Serious infirmities in the impugned order2. Applicability of extended period of limitation3. Availing exemption under Notification No. 30/2004-CE4. Reversal of cenvat credit on inputs5. Compliance with conditions of exemption notificationIssue 1: Serious infirmities in the impugned orderThe Tribunal found serious infirmities in the impugned order, noting that the show cause notices raised significant allegations against the assessee, including suppression of facts to evade duty payment. The original authority dropped all proposals, leading to the Commissioner (Appeals) failing to enter into the shoes of the adjudicating authority. The Tribunal remanded the case due to the failure to examine the plea of limitation and the appellant's compliance with the conditions.Issue 2: Applicability of extended period of limitationThe appellant received three show cause notices, which were adjudicated by the Additional Commissioner dropping the demands raised but appropriating interest under Section 11AC of the Central Excise Act. The Commissioner (Appeals) set aside the order, leading to the matter being remanded back to reconsider the case. The dispute was limited to the period before 06.08.2005, with the Tribunal ultimately allowing the appeal in favor of the appellant based on compliance with exemption conditions.Issue 3: Availing exemption under Notification No. 30/2004-CEThe appellant started availing exemption under Notification No. 30/2004-CE from October 2004 onwards. They maintained separate input records and reversed credits on various inputs, fulfilling conditions from 06.08.2005 onwards. The Commissioner (Appeals) acknowledged this compliance, leading to the demands raised before 06.08.2005 being unsustainable.Issue 4: Reversal of cenvat credit on inputsThe Tribunal considered various decisions supporting the appellant's case, emphasizing that even if the credit was reversed subsequently, the benefit of exemption notification should be allowed. The Tribunal referred to specific cases where reversal of credit at different stages, even during the appeal process, was considered sufficient to satisfy the conditions of the notification.Issue 5: Compliance with conditions of exemption notificationBased on the Tribunal's analysis of relevant case law, including the decision in the case of Mangal Textile Pvt. Ltd., it was concluded that the appellant had fulfilled the conditions of the exemption notification. The Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, granting consequential relief.This detailed analysis of the judgment covers the serious infirmities in the impugned order, the applicability of the extended period of limitation, the availing of exemption under Notification No. 30/2004-CE, the reversal of cenvat credit on inputs, and the compliance with the conditions of the exemption notification.