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2015 (10) TMI 1931 - AT - Central ExciseDenial of cenvat credit - Reclassification of goods - final product was exempted from duty - On being pointed out for wrong availment, assessee revered the credit by debiting in their RG 23A Part-2 - held that:- Classification issued was decided by the Dy. Commissioner of Central Excise in 23.6.2002 whereas the SCN of denial of cenvat credit was decided by the Addl. Commissioner subsequently on 31.03.2003. Though the appellants contended before the adjudicating authority which was recorded at para -20 of the OIO that the final product has been already re-classified under ch. 5205.11 and chargeable to duty and the appellants are eligible for modvat credit, the same was not considered by the adjudicating authority. We also find that the appellants reversed the entire ineligible credit on 28.02.2001 through RG23-part-2. We also find that when the duty was confirmed on the final products on account of change of classification, the appellants again paid the duty on 30.03.2004. We find that the appellants initially availed the credit when the final product was exempted but when the department re-classified the product Covered spandex yarn form ch. 5205.90 to ch. 5205.11, the final product becomes chargeable to duty, and the appellants eligible for cenvat credit on the inputs used in the said final product. Once the department demanded duty on the final products at a later date by changing classification the appellants are eligible for modvat credit on the inputs. Appellants are eligible for input credit of ₹ 21,85,955/- availed on the inputs Lycra Spandex yarn from the date of availing credit used in the manufacture of Covered spandex yarn, classified under Ch. 5205.11 as the final product is no more exempted and becomes dutiable. However, we find that the appellants have utilized the credit of ₹ 90,663/- when the final product was not dutiable till the classification was decided under ch. 5205.11, therefore they are liable for penalty under Rule 25. - Decided partly in favour of assessee.
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