Tribunal remands case for fresh decision on cenvat credit adjustment

The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision based on the appellant's submission to adjust the cenvat credit and interest against the amount already paid.

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Issues:
The case involves the availing of cenvat credit on ceramic roller used in the manufacture of capital goods and its impact on the eligibility for partial exemption under notification no. 5/2006-CE dated 01.03.2006.

Summary:
The appellant, engaged in manufacturing ceramic glazed tiles, availed cenvat credit on ceramic roller treating it as a capital good. The central excise officers found that the appellant had availed cenvat credit on the ceramic roller, which was intended for use as a capital good in the manufacture of excisable goods. The department contended that this violated condition no. 7 of notification No. 5/2006-CE, leading to a demand for differential excise duty and penalties. The appellant argued that the ceramic roller was part of the capital goods and not directly used in manufacturing ceramic tiles, therefore not violating the notification.

The appellant further submitted that they had deposited an amount equal to the cenvat credit availed, which could be adjusted against the credit. Citing various judgments, the appellant contended that the reversal of cenvat credit at the appeal stage would comply with the notification's conditions. The revenue authority reiterated the findings of the impugned order.

The Tribunal found that the case could be resolved without delving into the merits, as the reversal of credit and payment of interest could be adjusted from the amount already deposited by the appellant. Referring to previous judgments, the Tribunal noted that agreeing to reverse the credit at the appeal stage would satisfy the notification's condition. Therefore, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision based on the appellant's submission to adjust the cenvat credit and interest against the amount already paid.

This decision was pronounced in the open court on 02.05.2023.

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