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2023 (1) TMI 988 - AT - Central ExciseCENVAT Credit on inputs used in the manufacture of Sulphur Powder falling under sub-heading No. 2503 0090 of Central Excise Tariff Act-1985 - denial of credit on the ground that the Sulphur Powder is correctly classifiable under sub-heading No. 2503 0090 which attracts nil rate of duty - Revenue Neutrality - Applicability of Rule 16 of Central Excise Rules 2000 - HELD THAT:- The appellant is not disputing the classification however their contest is that once the duty on the finished goods was paid even though it attracts nil rate of duty, the cenvat credit cannot be denied - there is no dispute that the appellant have paid the excise duty on the finished goods which is more than the cenvat credit availed on the input used in the said finished goods, therefore, this is clear case of Revenue neutral, for this reason, demand cannot be sustained. This similar issue has been considered by the Hon’ble Supreme Court in the case of COMMISSIONER OF C. EX., JAMSHEDPUR VERSUS JAMSHEDPUR BEVERAGES [2007 (4) TMI 264 - SC ORDER], wherein the Hon’ble Supreme Court held that excise duty paid and the Modvat credit availed were identical and therefore consequences of payment of excise duty after availing Modvat credit was revenue neutral. In view of the above apex court judgement, as per the facts of the present case also, it is clear case of Revenue Neutrality, therefore, demand is not sustainable on this ground. Applicability of Rule 16 of Central Excise Rules 2000 - HELD THAT:- Rule 16 clearly provides that an assessee can receive the duty paid goods in their factory and avail the cenvat credit and while clearing the same out of the factory, the same can be cleared on payment of excise duty. In this provision, the duty paid goods is deemed to be input in terms of Cenvat Credit Rules. The said goods can be cleared on payment of duty and the credit availed on the goods received by the assessee is allowed - In the present case also, the appellant have received the duty paid inputs, thereafter processed the same and cleared after processing on payment of duty on the transaction value. This would as permitted in terms of Rule 16 of Central Excise Rules 2000, therefore, the transaction in the present case is squarely covered by the Rule 16 of Rules. The demand is not sustainable - Appeal allowed - decided in favor of appellant.
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