2006 (6) TMI 53 - AT - Central Excise

Tribunal grants relief, sets aside penalties, rules in favor of appellant under Notification 30/2004.

FORBES GOKAK MILLS LIMITED Versus COMMISSIONER OF C. EX., BELGAUM

The Tribunal allowed the appeal, setting aside the demands and penalties imposed by the Commissioner. They held that the appellant, despite not ... Cenvat / Modvat – Credits availed in respect of manufacture of exempted goods reversed simultaneously and it also said no input credit had been availed – It satisfied Notification No. 30/2004 –C.E. and benefit received of it alongwith Notification No. 29/2004. Issues:Interpretation of Notification No. 29 and 30/2004 for availing benefits simultaneously with Cenvat credit; Reversal of credit on exempted goods; Application of Rule 6(3)(vi) of Cenvat Credit Rules, 2002; Applicability of previous rulings on similar cases.Analysis:The appeal before the Appellate Tribunal CESTAT, Bangalore arose from an Order-in-Appeal confirming demands and penalties raised by two show cause notices. The main issue revolved around the interpretation of Notification No. 29 and 30/2004 regarding the eligibility to avail benefits simultaneously with Cenvat credit on duty paid inputs used in manufacturing dutiable and non-dutiable goods. The assessee argued that Rule 6(3)(vi) of Cenvat Credit Rules exempted them from maintaining separate accounts for textile products and they had reversed the credit on exempted goods, making them eligible for the notifications. However, the Commissioner disagreed, leading to the appeal.The counsel for the appellant contended that a previous ruling by the same bench in the case of Reid and Taylor supported their claim as they had reversed the credit after availing the benefit of the Notification. They argued that the precedent set by the Tribunal and High Court in cases like Hello Minerals Water and Tube Investments supported their position, emphasizing that once the credit is reversed, the benefit of the notification must be extended. They maintained that there was no error in applying Rule 6(3)(vi) and, therefore, they were entitled to the benefit.Upon careful consideration, the Tribunal agreed with the counsel, citing the Chandrapur case to support their decision. They noted that despite not maintaining separate accounts, the appellants had reversed the credit on goods cleared free of duty before removal from the factory, aligning with the conditions of Notification 30/2004. The Tribunal found that no input credit had been availed, thus satisfying the condition of non-availment of input credit. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.In conclusion, the Tribunal upheld the appellant's argument, referencing past judgments and legal principles to support their decision. The Tribunal found that the appellant had followed the rules diligently, and there was no merit in the Commissioner's order. The appeal was allowed, and any consequential relief was granted in favor of the appellant.