2023 (10) TMI 591 - AT - Central Excise

Appellant entitled to exemption by reversing credit & paying interest; Tribunal orders remand for interest calculation.

Selvi Ceramics Versus C.C.E. & S.T. -Rajkot

The Tribunal found that the appellant, by being prepared to reverse the credit and pay interest on the amount availed, was entitled to exemption despite ... Bar in availing the cenvat credit on the capital goods - Benefit of exemption notification No. 05/2006- CE dated 01.03.2006 - denial of exemption on the ground that the Ceramic Roller and Bellow are inputs and availment of credit on such inputs amounts to contravention of condition of the Notification No. 05/2006 –CE which is not correct - HELD THAT:- The appellant have conceded that they are ready to reverse the credit which was taken on ceramic rollers and bellow amounting to Rs. 1,57,799/- and also ready to pay interest there on. It is found that the appellant has already paid the amount of Rs. 2 Lacs, however, the interest element on the cenvat credit of Rs. 1, 57,799/- has not been quantified. If the appellant makes good the reversal of cenvat credit and interest there on which can be adjusted against Rs. 2 Lacs already paid and if there is any shortfall, the same may be paid by the appellant at the time of de-novo adjudication. Thus the appellant is entitled for the exemption Notification - The appellant are eligible for the exemption Notification No 05/2006-CE on the payment of cenvat credit and interest thereon. Appeal is allowed by way of remand to the Adjudicating Authority for computing the interest on the cenvat credit and ensure the payment thereof and thereafter a reasoned de-novo order may be passed. Issues involved:The issue involved in the present case is whether the appellant is entitled to exemption under Notification No. 05/2006-CE despite availing cenvat credit on certain items.Comprehensive details of the judgment:Issue 1:The appellant availed cenvat credit on Ceramic Roller and Bellow used in the manufacture of Roller Kiln, believing them to be parts of capital goods. The audit party objected, leading to a show cause notice proposing denial of exemption and demand of duty, penalty, and interest. The Adjudicating Authority confirmed the demand, leading to the appellant's appeal and stay application. The Tribunal directed a pre-deposit of Rs. 2 Lacs, which the appellant complied with.Issue 2:The appellant argued that the items on which cenvat credit was taken were parts used in the construction of roller kiln, classifiable under capital goods. The Adjudicating Authority denied exemption, considering the items as inputs. The appellant contended that the pre-deposit should be considered as a reversal of cenvat credit, making them eligible for the exemption. Citing precedents, the appellant sought restoration of the exemption.Issue 3:The Revenue reiterated the findings of the impugned order, opposing the appellant's contentions.Judgment:After considering submissions, the Tribunal found that the appellant's readiness to reverse the credit and pay interest on the amount availed was crucial. The appellant's payment of Rs. 2 Lacs was noted, but the interest element on the cenvat credit was yet to be quantified. The Tribunal held that if the appellant reversed the credit and paid interest, adjusting against the Rs. 2 Lacs already paid, any shortfall could be settled during de-novo adjudication. Citing legal precedents, including the Supreme Court's ruling in Chandrapur Magnet case, the Tribunal concluded that the appellant was entitled to the exemption. The impugned order was set aside, and the appeal allowed for remand to compute and ensure payment of interest before a reasoned de-novo order is passed by the Adjudicating Authority.