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2019 (1) TMI 423 - AT - Central ExciseCENVAT Credit - availing 50% credit on capital goods after absolute exemption - manufacture of cotton yarn - appellant availed exemption under Notification No.29/2004-CE dt. 09.07.2004 which provides 4% duty advalorem and also under Notification No.30/2004-CE dt. 09.07.2004 which provides for Nil rate of duty - denial of credit on the ground that cotton yarn was therefore absolutely exempted during the period from 07.12.2008 to 06.07.2009, and the assessees were prohibited from paying duty on their own and hence the assessees were not entitled for Cenvat Credit during this period. Held that:- No doubt, as per sub-rule (4) of Rule 6 of Cenvat Credit Rules, 2004, availment of cenvat credit is barred in respect of capital goods which are used captively in the manufacture of exempted goods. However, when the manufacturer was entitled to take credit on the duty paid capital goods at the time of their receipt it would be unjust and beyond the provisions of law to deny availment of remaining amount of credit only on the grounds that at the time of taking the second instalment the final goods were exempted. What is important to be seen is the eligibility or otherwise availment of credit, at the time of receipt of the goods in the factory. Restriction of availment of 50% in the first financial year and the balance subsequently, is only a procedural compulsion brought about by sub-ordinate legislation. However that cannot take away the right of availment of credit that is vested with the appellant at the time when goods were received in the factory. Appeal dismissed - decided against Revenue.
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