TaxTMI 
TaxTMI 
2020 (2) TMI 1574
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....r lapsing of credit lying unutilised shall not apply? (II) Whether, in the context of the facts and in the circumstances of the case, the CESTAT was justified in holding that the lapsing of Cenvat credit provided under Rule 11(3) related to goods already exported shall not apply? (III) Whether, in the context of the facts and in the circumstances of the case, the CESTAT was justified in holding that as per Clause (ii) of Rule 11(3) of Cenvat Credit Rules, 2004, credit related to capital goods and input services shall not lapse, therefore, the unutilized Cenvat credit lying in balance related to capital goods and input service cannot be demanded?" 3. The brief facts of the case are that the respondent-assessee is registered under the provisions of the Act, 1944 for the manufacturing and clearance of terry towel and bed sheet items falling under Chapter Heading 63 of the Central Excise Tariff Act, 1985. The respondent-assessee was not availing the area based exemption Notification No. 39/2001-C.E., dated 31-7-2001 since October, 2007. The assessee was procuring the inputs/input services on payment of duty and availing the Cenvat....
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.... 5. The adjudicating authority, vide order dated 28-9-2011, confirmed the demand of Cenvat credit of Rs. 9,27,04,652/- under Rule 14 of the Rule read with Section 11A of the Act alongwith interest and imposed equal amount of penalty. The adjudicating authority also confirmed reversal of credit on capital goods and input service. Being aggrieved by the said order, the respondent-assessee went in Appeal before the Tribunal. 6. The Tribunal, considered the fact that the refund claim of the respondent-assessee has achieved finality, and therefore, question of application of Rule 11(3) of the Cenvat Credit Rules, 2004 would not come into play, as the respondent-assessee cannot be asked to reverse the credit on the goods which are already exported. The Tribunal has observed as under :- "5. We have carefully considered the submissions made by both the sides and perused the records, we find that by the impugned order, the adjudicating authority has demanded the Cenvat credit lying in balance as on 1-4-2008 invoking Rule 11(3) of Cenvat Credit Rules, 2004, which reads as under :- "(3) A manufacturer or producer of a final product shall be required t....
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....ed otherwise it will amount to review of refund sanction order. Moreover, Rule 6(6) of Cenvat Credit Rules, 2004 provides for allowing the Cenvat credit in respect of inputs used in the goods exported. The said Rule is reproduced below :- "(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) cleared to a unit in a special economic zone; or to a developer of a special economic zone for their authorized operations; or (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number G.S.R. 602(E), dated the 28th August, 1995; or (v) &nb....
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.... cannot be defeated by invoking Rule 11 of the Cenvat Credit Rules, 2004. It has been held in various judgments cited by the Ld. Counsel i.e. Drish Shoes Ltd. and Rero India Ltd. (supra), even though the export goods is non-dutiable against the export Cenvat credit on inputs used in such export goods is admissible and refund of the same is also admissible under Rule 5 of the Cenvat Credit Rules, 2004. Therefore, the adjudicating authority ignoring all the provision of Rule 6(6), demanded Cenvat credit lying in balance as on 1-4-2008 invoking Rule 11(3) in isolation which is absolutely illegal and incorrect. As regard unutilized Cenvat credit as on 1-4-2008 amounting to Rs. 69,43,864/-, it is related to input service credit and capital goods. From the plain reading of Rule 11(3), it is clear that the provision of reversal of the credit is provided only in respect of inputs and not on input service and capital goods. The provision for lapsing or credit provided in Clause (ii) of Rule 11(3), the principle of ejusdem generis shall apply, accordingly, credit related to capital goods and input services shall not lapse, therefore, the unitulized Cenvat credit lying in balance related to c....