TMI Blog2013 (3) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... dia or exported. - Notification No. 30/2004-C.E. provides for exemption from whole of duty and therefore respondent’s case is covered under sub-rule (3)(i) of Rule 11 and not under sub-rule (3)(ii). Commissioner (Appeals) has erred in not considering the word ‘or’ after sub-rule (3)(i). - Decided in favour of assessee. - F. No. 198/75-76/2011-RA - Order Nos. 227-228/2013-CX - Dated:- 6-3-2013 - Shri D.P. Singh, Joint Secretary Shri V. Sankaran, Supdt. of Central Excise, for the Department. Shri S. Murugappam, Advocate and K. Lakshman, Shankar, AGM, for the Assessee. ORDER These revision applications are filed by the applicant Commissioner of Central Excise, Madurai against the Order-in-Appeal No. 498/2010 dated 26-10-2010 and 480/2010 dated 27-10-2010 passed by the Commissioner of Central Excise (Appeals), Madurai with respect to Order-in-Original No. 18/2009-C.E. (Refund) dated 31-8-2009 and 14/2009-C.E. (Refund) dated 27-7-2009 passed by Assistant Commissioner of Central Excise, Virudhunagar Division. M/s. Valli Textile Mills (A unit of Loyal Textile Mills Ltd.), Virudhunagar are the respondents in these cases. The detail of revisissson applications is as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om out of ineligible Cenvat credit. 2.1 Brief facts of the case in R.A. No. 198/76/11-RA (Order-in-Appeal No. 480/2010). The respondents are engaged in the manufacture of Cotton Yarn, Cotton fabrics, Knitted Fabrics of Chapter 52 and Polyester Cotton Blended Knitted Fabrics of Chapter 55 of Central Excise Tariff Act, 1985 and clear the same for home consumption and for export also. The respondents have exported Cotton Grey Fabrics and Grey Knitted Fabrics on payment of duty under claim for rebate in terms of Rule 18 of Central Excise Rules, 2002 and 15 rebate claims on 31-7-2008, (3 claims on 31-7-2008, 2 claims on 11-8-2008 and 10 claims on 16-9-2008) for a sum of ₹ 67,10,159/-. Of this sum of ₹ 67,10,159/-, an amount of ₹ 65,14,712/- BED plus ₹ 23,933/- Edu Cess was paid from Cenvat credit account in terms of Cenvat Credit Rules, 2004 and an amount of ₹ 1,06,364/- BED plus ₹ 65,150/- Edu Cess was paid in cash through Personal Ledger Account. Vide Notification No. 29/2004-C.E., dated 9-7-2004, effective rates of duty of excise are prescribed for the Textile and Textile Articles thereof falling under Chapter 50 to Chapter 63 of Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying in stock, if (i) he opts for exemption from whole of duty of excise leviable on the said final product manufactured or produced by him under a notification issued under Section 5A of the Act; or (ii) the said final product has been exempted absolutely under Section 5A of the Act, and after deducting the said amount from the balance of Cenvat credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service; whether provided in India or exported. As per the above Rule 11(3) of Cenvat Credit Rules, 2004, the un-utilized Cenvat credit lying in balance as on 1-3-2007 shall lapse and shall not be allowed to be utilized for payment of duty on any other final product cleared for home consumption or for export; However, it is alleged that the respondents have utilized an amount of ₹ 65,14,712/- BED plus ₹ 23,933/- Edu Cess from such un-utilised Cenvat credit lying in balance as on 1-3-2007 towards payment of duty on Cotton Grey Fabrics and Cotton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 1-3-2007, a manufacturer of final product would be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, in anyone of the following two circumstances i.e. (i) when he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under Section 5A of the Act or (ii) the said final product has been exempted absolutely under Section 5A of the Act. It further states that after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported. In this case, it is an admitted fact that the assessees had availed the whole exemption provided under Notification No. 30/2004-C.E., dated 9-7-2004, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia or exported is a second dictum in continuation of the first dictum requiring payment of an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock. 4.3 The interpretation sought to be given by the Commissioner (Appeals) would discriminate between the assessees who opt for conditional exemption and those who avail unconditional exemption even though both the notifications are impermanent in their nature, as in the first case the assessee can withdraw himself from availing the exemption at any time and in the second case, the Government can withdraw the exemption at any time. Such a discrimination would defeat the intention of the sub-rule that whenever an assessee opts for availing exemption all the credits that may be available in the Cenvat credit account after deducting the credits attributable to inputs lying in stock or in process or is contained in the final product lying in stock, unutilized should be made to lapse. 4.4 A doubt may arise as to why the sub-rule places the second dictum ibid at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Board of Excise and Customs had confirmed the very promise of the Central Government in the Budget, 2004 that, the textile manufacturers can avail the Notifications 29/2004-C.E., dated 9-7-2004 and 30/2004-C.E., dated 9-7-2004 simultaneously, vide letter F. No. 345/2/2004-TRU, dated 28-7-2004 (Circular No. 795/28/2004-CX). The clarification reads as under : Notification 29/2004-C.E. (prescribing optional duty at the rate of 4% for pure cotton goods and 8% for other goods) and No. 30/2004-C.E. (prescribing full exemption) are independent notifications and there is no restriction on availing both simultaneously. However, the manufacturer should maintain separate books of account for goods availing notification No. 29/2004-C.E. and for goods availing Notification 30/2004-C.E. (Emphasis supplied) 5.3 We submit that, in plethora judgments various appellate forums had held that, Where two exemption notifications covers the goods in question, the assessee is entitled to the benefit of that exemption notification which gives greater benefit regardless of the fact that, the notification is general in its terms and the other notification is more spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 30/2004 ibid. This contention is highly dramatic since there is no stipulation in the Notification 30/2004 above that, the buyer should not pay duty on their final goods when no duty had been paid on the raw materials (inputs) have been supplied. In the show cause notice the exemption contained in the Notification 30/2004 had been interpreted to give a meaning which is favourable to them. The condition of the notification is that, Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs has been taken under the provisions of Cenvat Credit Rules, 2002. 5.5 We submit that we had continued the balance amount of un-utilized credit earned prior to 9-7-2004 for future availment. No law restricts such continuation of accumulated credit in the circumstances explained above. Therefore, the credit lying in or Cenvat books shall not be treated as amount lapsed in terms of Rule 11(3)(i) of Cenvat Credit Rules, 2004. We submit that, rebate is an incentive given to the exporters to encourage them for export more. Their claims had been submitted for the export made in terms of the Notification 19/2004-C.E. (N.T.), 6-9-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if - (i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or (ii) the said final product has been exempted absolutely under section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported. 9.2 The sub-rule (3)(i) (ii) of Rule 11 of Cenvat Credit Rules, 2004 clearly stipulates that if a manufacturer opts for exemption from whole of duty of excise leviable on the said final product under a Notification issued under Section 5A of the Act o ..... 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