Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2014 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 749 - AT - Central ExciseCENVAT Credit - Reversal of credit when finished goods became exempt - Methol Flakes and Menthol Crystals - Applicability of Rule 11 (3) - Held that:- Sub-rule 3 would be applicable if the some cenvat credit availed inputs are being used for manufacture of a final product and that final product has become fully exempt from duty. In such a situation, the assessee would be liable to pay an amount equal to the cenvat credit involved in respect of the inputs lying in stock or in process, or contained in the final products lying in stock on the date of exemption, and after deducting this amount from the cenvat credit balance, if any, as on the date of exemption, if any cenvat credit balance still remains, it shall lapse and the same shall not be allowed to be utilized for payment of duty on any goods whether cleared for home consumption or for export. In our view, this sub-rule would not apply when out of common cenvat credit availed inputs, more than one final products are manufactured and while some final products have become exempt, others have remained dutiable. Since in terms of sub-rule (4) of Rule 3 of the Rules, the cenvat credit may be utilized for payment of any duty of excise on any final product, if out of the same cenvat credit availed inputs, more than one final product are manufactured and out of those final products, one final product has become fully exempt from duty, the cenvat credit can be utilized for payment of duty on the other final products, which are dutiable and as such, the manufacturer’s right to utilize the cenvat credit for payment of duty on the final products which are still dutiable cannot be taken away just because out of several final products, one final product has become exempt from duty. We, therefore, hold that the Revenue’s interpretation of Rule 11(3) is not correct. While the provisions of sub-rule (3)(ii) of Rule 11 of the Cenvat Credit Rules, 2004 are not applicable, the provisions of sub-rule (1) of Rule 6 of the Cenvat Credit Rules, 2004, would be applicable , if during the period of dispute, the appellant were clearing their finished products for home consumption. However, the provisions of either sub-rule (1) or of sub-rule (2) read with sub-rule (3) of Rule 6 would not be applicable, if the appellant were exporting their finished products out of India under bond or under Letter of Undertaking. However, the Appellant have not produced any evidence in support of their plea that during the period of dispute, the finished products were being exported under bond/LUT. The impugned order is, therefore, set aside and the matter is remanded to the original adjudicating authority for de novo adjudication after ascertaining as to whether during the period of dispute, the appellant were exporting their final products and keeping in view our observations in this order. - Decided in favour of assessee.
|