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2018 (5) TMI 1205 - AT - Central ExciseCENVAT credit - it was found that the appellant had not reversed the CENVAT credit under Rule 6(3) on the exempted goods - What is the meaning of expression “which are exempt from the duties of customs” under rule 6(6)(vii) of CENVAT Credit Rules, 2004 – does it include only goods which are fully exempted or it also includes the goods which are partially exempted from the customs duty? - is the appellant required to reverse the credit as per Rule 6(3) of CENVAT credit Rules? Held that: - The harmonious interpretation of the expression “goods which are exempted from duties” with the remaining part of the scheme of CENVAT credit rules would require one to interpret as the goods which are fully exempted from duty. Hence, even 2.5% duty of customs will not make the goods “which are exempted from duty’ - the appellant is not exempted from reversing the credit as per Rule 6(3) of CENVAT Credit Rules. Whether the assessee has resorted to fraud, wilful misstatement, suppression of facts or violation of any condition of the Act or Rules, with an intent to avoid payment of duty? - Held that: - it is evident that the assessee had declared both the fact that they have availed the exemption notification and also that they have not reversed any CENVAT credit, in their ER-I returns filed with the department. I do not find that they have suppressed any facts or misstatement or violated any act of Rules with an intent to evade payment of duty. It appears that the Officer who scrutinised the returns, has not pointed out that they have not reversed the credit and only audit discovered and pointed it out - the extended period limitation is not invokable in this case - the penalty u/r 15(2) of CENVAT Credit Rules 2004 read with Section 11 AC does not survive. The amount of interest under rule 14 of CENVAT Credit Rules 11AA also gets reduced correspondingly. Appeal allowed in part.
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