AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 882
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....04 and whether the said credit can be utilised for payment of duty. The case of the Department is that as per Rule 11(3) of Cenvat Credit Rules, 2004, if the appellant avail the exemption the Cenvat credit on the stock as on the date of opting for the said exemption Notification No. 30/2004-CE shall stand lapse and consequently, the same cannot be utilised for payment of duty. 2. Shri Suyog Bhave with Shri Mohit Rawal, Learned Counsels appearing on behalf of the appellant submits that the bar under Rule 11(3) of Cenvat Credit Rules, 2004, is only in respect of absolute exemption Notification and the same does not apply in respect of the conditional exemption Notification. It is his submission that Notificaiton No. 30/2004- CE dated 09.07.2004, is admittedly a conditional notification. Therefore, for availing the said notification the provision for lapsing of credit as provided under Rule 11(3) Cenvat Credit Rules, 2004, does not apply. He further submits that in the present appeals there is a demand towards the utilization of the same Cenvat credit which according to department has lapsed. He submits that since the credit was rightly carry forwarded and the same is not liable to b....
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....sues in the case of Wearit Global Ltd. 2018 (8) TMI 1094-CESTAT, Janson Textile Processors 2018 (7) TMI 850- CESTAT-Chennai and Sitaram India Ltd. 2018 (10) TMI 11- CESTAT-New Delhi, the credit stands allowed to the manufacturer. 7. We, therefore, allow the appeals filed by both the Appellants with consequential reliefs, if any. Revenue's appeal being involved the amount less than Rs.20Lacs is dismissed on the ground of Government's litigation policy instruction F.No. 390/Misc/116/2017-JC dated 11.07.2018." * Union of India Vs. Kanchan India Limited, 2019 (7) TMI 1583- Rajasthan High Court. "1. The question of law suggested by the Revenue in the present case involves interpretation of Rule 11(1) of the Cenvat Credit Rules, 2004 (for short, the Rules of 2004'). 2. The assessee-respondent had resisted a show cause notice which sought to invoke Rule 11(3) and lapsed Cenvat Credit on the ground that the final product was duty exempt by virtue of notification No.30/2004 dated 09.07.2004. The show cause notice was made absolute and the Cenvat Credit was directed to lapse. 3. The CESTAT which issued the impugned order in the appeal preferred by the respondent-assessee rel....
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....ition that no Cenvat credit should be availed whether Cenvat credit lying in balance after reversal on inputs, WIP and inputs contained finished goods, shall lapse in terms of Rule 11(3). For the ease of reference we reproduced Rule 11(3):- "[(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if, - "(i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or (ii) the said final product has been exempted absolutely under section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided ....
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....ecified description from the whole or any part of the duty of excise leviable thereon: Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured- (i) in a[free trade zone[or a special economic zone]] and brought to any other place in India; or (ii)by a hundred per cent export-oriented undertaking and [brought to any other place in India]. Explanation.-In this proviso,["free trade zone" ["special economic zone"]] and "hundred per cent. export-oriented undertaking" shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. [(1A)For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods.] * ............ In the aforesaid section 5A in Sub-section (1) exemption is of two category one is exemption which exempt the goods absolutely and other is subject to such condition as specified in the Notification. In terms of Sub-se....
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....r for export, or for payment of service tax on any output service, whether provided in India or exported." 7.On the plain reading of the above Rule 11(3)(i) (ii), it is clear that as per sub-clause (2), the credit shall be lapsed only if the exemption under the Notification is absolute that means in case of conditional Notification the provision of lapsing of credit will not apply. This issue has been considered by this Tribunal in various judgments. 7.1 In case of Patodia Filaments Pvt. Ltd.(supra), the Tribunal has observed as under :- "6.Heard both the sides and perused the records. We find that the notification No. 30/2004-C.E., dated 9-7-2004 is not an absolute notification but a conditional notification issued under Section 5A. The notification has the condition of non-availment of Cenvat credit. The sub-rule (3)(i) and (ii) of Rule 11 of the CCR, 2004 are separate. In the present case the sub-rule 3(i) would thus apply as per which the manufacturer is required to pay an amount equivalent to the Cenvat credit in respect of inputs used in the manufacture of said final product and is lying in stock or in process or is contained in final product lying in stock. In the p....
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....tion 5A of Central Excise Act. But since the Notification No. 30/2004-C.E., dated 9-7-2004 is a conditional notification, hence only Rule 11(3)(i) of CCR would apply which does not mandate any such lapsing. 6. We draw our support from the decision of CESTAT Chennai in the case of Janson Textile Processors v. Commissioner of Central Excise & ST, Salem, wherein it was held as follows :- "5.1 The core issue that comes up for decision is whether the transitional provisions contained in sub-rule (3) of Rule 11 will be applicable to both sub-rules 3(i) and 3(ii). For better understanding, the relevant provisions relating to manufacturers are reproduced as under:- RULE 11. Transitional provision. - .............. (3)A manufacturer or producer of a final product shall be required to pay an amount equivalent to the Cenvat credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if, (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issue....
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....e contrary in the impugned order is not on sound legal footing. The impugned order then cannot sustain and will require to be set aside, which we hereby do. Appeal is allowed with consequential benefits, if any, as per law. 7.Following these 2 decisions and indulging the facts at length, we are of the considered opinion that the ratio laid down in the judgments are squarely applicable in this case, and therefore, we allow the appeal." 7.After going through the facts of the case which is similar, to the above we propose to apply the same in case at hand, we allow the appeal." 8. In view of the above judgments, it is settled that after reversal of credit in respect of input, input in process and input contained in final products whatever balance is left shall lapse only when the Notification is unconditional. As regards, the judgment relied upon by the Learned Authorised Representative, on careful consideration, we find that the issue involved in such case was eligibility of exemption Notification No. 30/2004-C.E. Though some observation was made by the Hon'ble Bench, however, no final decision was given on the said issue, as the said issue was not the subject matter of the ....
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.... Atmaram v. UOI, AIR 1961 SC 935; Firoj Farukee v. State of West Bengal, AIR1972 SC 2141] . However, in respect of the sub-rule 3 (i) and subrule 3 (ii) ibid, there should not be any such confusion or doubt, since those two sub-rules are separated not by just a particle 'or' but also by a semicolon (;), thus creating an additional wall for conveying mutual exclusivity between the two sub rules. There is also no basis for suggesting that the use of 'or' between these sub-rules conveys the meaning 'or both'. For example, to be able to impose both a fine and a penalty, one would need to add 'or bo0th' to the end of the phrase. That surely is not the case here. 5.3 Viewed in this context, it is but obvious that the legislature intended the said sub rules 3 (i) and 3 (ii) to be two distinct and separate alternatives, with distinctively different qualifying factors and conditionality. 5.4 In sub rule 3 (i), the assessee has an option to avail of a particular notification or otherwise; when such assessee takes such option, he will be required to pay an amount equivalent to cenvat credit, if any, ..... taken by him in respect of inputs received for use in the manufacture of the fi....
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....nsitional provisions which are required to be followed by an assessee opting from the route of payment of duty to that of availing exemption. The question for decision is whether the respondent will be covered by the provisions of Rule 11(3)(i) or 11(3)(ii). 7. We find that the identical issue has been considered in detail in the case laws relied by the respondent. In the case of Jansons Textile Processor (supra), the Chennai Bench of the Tribunal has taken the view that in case of conditional exemption such as exemption under Notification No. 30/2004, the assessee will be covered only by Rule 11(3)(i). This decision has been followed in the case of Wearit Global Ltd. (supra) wherein the Tribunal observed as under: "5. after hearing both the parties, we are of the opinion thatinthe present case the appellant has opted for exemption as per the Notification No. 30/2004-CE where the exemption is conditional. As per Rule 11(3) (ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No. 30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11 (3)(i) of CCR would app....
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.... separated by a semicolon ( ; ) followed by the disjunctive 'or'. The use of semicolon ( ; ), the punctuation mark is to separate two closely related independent clauses. 'Or' is a particle used to connect words, phrases or classes representing alternatives [ J. Jayalalitha Vs UOI - (1999) 5 SCC 138 ]. Only if the phrasing of the legal provision is such that in actuality 'and' is intended, should it be examined whether the alternatives separated by 'or' are not mutually exclusive. The Courts may construe 'or' as 'and', only if they find from the context that the wrong word must have been used.[Ranchhoddas Atmaramv.UOI, AIR 1961 SC 935; Firoj Farukee v. State of West Bengal, AIR 1972 SC 2141] . However, in respect of the sub-rule 3 (i) and sub-rule 3 (ii) ibid, there should not be any such confusion or doubt, since those two sub-rules are separated not by just a particle 'or' but also by a semicolon (;), thus creating an additional wall for conveying mutual exclusivity between the two sub rules. There is also no basis for suggesting that the use of 'or' between these sub-rules conveys the meaning 'or both'. For example, to be able to impose both a fine and a penalty, one would need ....