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of <h1>Cenvat Credit balance doesn't lapse under Rule 11(3) when availing conditional exemption notification per tribunal ruling</h1> <h3>Suraj Industries Versus C.C.E & S.T. -Silvasa</h3> CESTAT Ahmedabad held that balance Cenvat Credit does not lapse under Rule 11(3) of Cenvat Credit Rules, 2004 when availing conditional exemption ... Lapse of Unutilized Credit - Absolute exemption or Conditional exemption notification - Balance of Cenvat Credit shall lapse in terms of Rule 11(3) of Cenvat Credit Rules, 2004 - availment of Notification No. 30/2004-CE dated 09.07.2004 after reversal of Cenvat Credit on input, input in process and input contained in final product - HELD THAT:- It is found that the revenue’s contention is that on availment of exemption notification No. 30/2004-CE dated 09.07.2004 after reversal of Cenvat Credit on input, input in process and input contained in the final product, whatever balance credit is left out the same shall lapse in terms of Rule 11(3) of Cenvat Credit Rules, 2004. From the plain reading of the Rule 11(3) of Cenvat Credit Rules, 2004, it can be seen that as per 11(3)(i) if an assessee opt for exemption from whole of the duty under a notification issued under Section 5A, the assessee is required to pay an amount equalent to Cenvat Credit in respect of input lying in stock, input in process and input contained in the final product lying in stock. As per this rule irrespective of whether the notification is absolute or otherwise the assessee is required to reverse the credit in respect of input, input in process or input contained in final product lying in stock as on date of opting the exemption notification - it is clear that the reversal of credit on the stock of input, input in process and input contained in final product is required to be reversed by an assessee who avails any exemption. However, the provision for lapsing of credit on remaining balance shall apply only in case where the exemption notification is absolute. In the present case the notification No. 30/2004-CE contains a condition namely “provided that nothing contain in this notification shall apply to the goods in respect of which credit of duty on input has been taken under the provision of Cenvat Credit Rule, 2002”. Since the notification contained the said condition the notification No. 30/2004-CE is not an absolute exemption. Consequently, the provision of lapsing of the remaining credit in terms of Rule 11(3) (ii) shall not apply in the fact of the present case. This issue has been considered time and again in various judgments as cited by the appellant. Therefore, the issue is no longer res-integra. The impugned order is not sustainable. Hence, the same is set aside appeal is allowed. Issues involved:The issue involved in the present case is whether the balance Cenvat Credit shall lapse on availment of Notification No. 30/2004-CE dated 09.07.2004 after reversal of Cenvat Credit on input, input in process, and input contained in the final product, in terms of Rule 11(3) of Cenvat Credit Rules, 2004.Judgment Details:Appellant's Argument:The appellant argued that the balance Cenvat Credit shall not lapse as the Notification No. 30/2004-CE is not an absolute exemption but contains a condition. Therefore, Rule 11(3)(ii) should not apply in this case based on strict interpretation. The appellant cited various judgments to support this argument.Revenue's Argument:The Revenue contended that the balance credit should lapse in accordance with Rule 11(3) upon availing exemption under Notification No. 30/2004-CE.Analysis by the Tribunal:Upon careful consideration, the Tribunal noted that Rule 11(3) mandates the reversal of credit on input, input in process, and input contained in the final product when availing any exemption. However, the provision for lapsing of credit on the remaining balance applies only if the exemption notification is absolute. Since Notification No. 30/2004-CE contains a condition regarding the credit of duty on input, it is not an absolute exemption. Therefore, the provision for lapsing of remaining credit under Rule 11(3)(ii) does not apply in this case.Conclusion:Considering the above analysis and precedents cited, the Tribunal held that the impugned order is not sustainable. Consequently, the appeal was allowed, and the impugned order was set aside.Separate Judgment:No separate judgment was delivered by the judges in this case.
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