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2023 (5) TMI 1187 - AT - Central ExciseWrong availment of input tax credit of amount paid on fully exempted goods as per Sl. No. 90 of Notification No. 04/2006-C.E. dated 01.03.2006, as amended - main contention of the Department is that payment of duty at concessional rate without availing exemption for their first clearances of 3,500 M.T. is violative of the provisions of Explanation to sub-section (1A) of Section 5A of the Central Excise Act, 1944. Whether the principal manufacturer is eligible to avail exemption as per Notification No. 04/2006-C.E. dated 01.03.2006 under Sl. No. 91 and clear the goods on concessional payment of duty? - whether it is mandatory to avail ‘nil’ rate of duty as provided under Sl. No. 90 and consequently, whether the appellant herein is eligible for availment of CENVAT Credit of the duty paid by the principal manufacturer? HELD THAT:- In the case of M/S. KOVAI MARUTHI PAPER AND BOARDS, M/S. SARASWATHI UDYOG INDIA LTD, SHRI RAM CARTONS, M/S. SRIVARI PACKAGING INDUSTRIES VERSUS CCE, SALEM AND CCE, SALEM VERSUS M/S. SARASWATHI UDYOG INDIA LTD., M/S. KOVAI MARUTHI PAPER AND BOARDS [2018 (5) TMI 474 - CESTAT CHENNAI], the Chennai Bench of the Tribunal had examined whether the principal manufacturers should compulsorily avail the exemption under Sl. No. 90 of the said Notification which prescribes ‘nil’ rate of duty. The Tribunal had followed the decision in the case of BALKRISHNA PAPER MILLS LTD, LAXMI BOARD AND PAPER MILLS LTD, COMMISSIONER OF CENTRAL EXCISE, THANE-I VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE –I AND LAXMI BOARD AND PAPER MILLS LTD [2015 (11) TMI 210 - CESTAT MUMBAI] wherein it was held that an assessee cannot be forced to avail the ‘nil’ rate of duty provided under Sl. No. 90 of the Notification. The Tribunal in the case of M/S. SRIPATHI PAPER & BOARDS VERSUS CCE & ST, TIRUNELVELI [2018 (9) TMI 891 - CESTAT CHENNAI] had occasion to analyse a similar issue, wherein it was decided that The first condition is that the exemption is available for the clearance of first 3500 MTs and the second condition is that the exemption is not applicable to a manufacturer who avails exemption under Notification No. 8/2003-CE dated 01.03.2003. The ‘nil’ rate of tax is therefore available subject to the satisfaction of both the above conditions and appeal allowed. The impugned order set aside - appeal allowed.
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