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2022 (8) TMI 1089 - AT - Central ExciseCENVAT Credit - capital goods - clearance of goods both for home consumption as well as for export without payment of duty - exempt goods or not - allegation of the department is that the credit availed on capital goods is not eligible prior to 10.6.2010 for the reason that the appellant has been clearing the goods both for home consumption as well as for export without payment of duty in terms of Notification No.30/2004-CE dated 9.7.2004. HELD THAT:- N/N. 30/2004-CE dated 9.7.2004 exempts payment of duty when the goods are cleared domestically. The Corrigendum issued to the notification makes it clear that the exemption is available even if credit is availed on capital goods. In other words, this notification bars availment of credit on inputs only. Rule 6(4) prohibits the availment of credit on capital goods which are exclusively used for the manufacture of exempted goods. The question then arises whether the availment of benefit of Notification 30/2004 would give rise to a situation that the capital goods are used exclusively for manufacture of exempted goods - It is to be noted that a manufacturer is given an option to avail the benefit of Notification 30/2004. It does not make the goods completely exempted from payment of duty. If the manufacturer avails credit on inputs, then he cannot avail the benefit of the exemption provided under Notification No. 30/2004. Rule 6(4) bars the availment of credit on capital goods which are used exclusively in the manufacture of exempted goods. As per Rule 2(d) of CENVAT Credit Rules, 2004 ‘exempted goods’ means “excisable goods which are exempt from the whole of duty of excise leviable thereon, and includes goods which are chargeable to nil rate of duty”. Thus, the goods cleared under Notification No.30/2004 without payment of duty is optional payment without duty and it cannot be said that these fall within the definition of ‘exempted goods’. Later, the appellant had availed the benefit of Notification No. 29/2004. As per this Notification, the domestic clearances get the benefit of concessional rate of duty. The department has denied the credit availed on capital goods for the period after 10.6.2010 alleging that though the appellant has paid duty on domestic clearance but the capital goods have also been used for manufacture of exported goods. Thus, they have considered the ‘exported goods’ as ‘exempted goods’. This is legally wrong. The definition of exempted goods does not take in goods which are exported. The issue as to whether the benefit of both the notifications can be availed and the credit on capital goods is eligible was considered by the Tribunal in the case of ST. COTTEX EXPORTS (P) LTD. VERSUS COMMISSIONER OF C. EX., LUDHIANA [2010 (1) TMI 1048 - CESTAT NEW DELHI]. The decision of the Tribunal was upheld by the Hon'ble High Court of Punjab and Haryana in COMMISSIONER OF C. EX., CHANDIGARH VERSUS ST. COTTEX EXPORTS PVT. LTD. [2011 (1) TMI 491 - PUNJAB & HARYANA HIGH COURT] whereby the appeal filed by Revenue was rejected - it was held that Under sub-rule (4) of Rule 6 of Cenvat Credit Rules, 2004, capital goods Cenvat credit is inadmissible only in respect of those capital goods which are exclusively used in the manufacture of exempted goods - in present case it cannot be said that the capital goods in question had been used exclusively for the manufacture of fully exempted finished products. Jurisdiction - HELD THAT:- The learned AR has submitted that the writ petition filed by the appellant against the order of the Revisionary Authority is pending before the Hon'ble High Court. The said writ petition is against the order of the Revisionary Authority in regard to rebate claims. The Tribunal has no jurisdiction to consider any order passed in regard to rebate claims. However, the jurisdiction for deciding the eligibility of credit as well as application of CENVAT Credit Rules lies within the Tribunal - In the present case, the demand has been issued for recovery of credit wrongly availed on capital goods and is fully within the jurisdiction of this Tribunal. The disallowance of CENVAT credit on capital goods is without legal or factual basis - Appeal allowed.
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