TMI Blog2016 (3) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... /- on payment of duty under Notification No.29/2004-CE on the date it took the impugned Cenvat credit, in which case arguably, there would have remained no basis to initiate these proceedings. Thus, it is evident that there was no mala fide on the part of the appellant in the present case. Further, it is seen that the recovery of the impugned amount was ordered in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944. As the impugned amount was reversed even prior to issuance of Show Cause Notice in this case, even issuance of Show Cause Notice to demand the impugned credit was not necessary. In these circumstances, imposition of penalty is not warranted in this case. The appeal is allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was cleared duty free under Notification No.30/2004-CE, with effect from 02.026.2016, it also started paying duty on cotton yarn under Notification No.29/2004-CE and therefore, the credit on the impugned capital goods should be allowed atleast w.e.f. 02.02.2006 as from that date onwards, the said capital goods were not used exclusively for manufacture of exempted goods. He conceded that this contention was not raised before the lower authorities. The ld. Counsel cited the decision of CESTAT in the case of Brindavan Beverages Pvt. Ltd. Vs. CCE [2014 (310) ELT 398 (Tri.-Del.)]. 3. Ld. Departmental Representative, on the other hand, submits that the impugned capital goods were exclusively used for manufacture of exempted goods when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. According to the appellant, they are eligible for capital goods Cenvat credit, as in terms of the provisions of Rule 6(4) of the Cenvat Credit Rules, 2004, the capital goods Cenvat credit is to be denied only when the capital goods have been used exclusively for manufacture of exempted final product, not when the capital goods are used for dutiable as well as exempted final products and in this case the Cenvat credit cannot be denied as from the very beginning, the appellants intention was to use the capital goods, in question, for manufacture of both, dutiable as well as exempted final product and that notwithstanding the fact that till September 2006, the machinery was used only for manufacture of fruit pulp based soft drinks (exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer will be availing full duty exemption (for some months or for several financial years at a stretch) but subsequently at some point of time when he crosses the threshold limit for exemption, his final product becomes dutiable and in such a case, even during the period of full exemption, the manufacture can take capital goods Cenvat credit which he can utilize when this final product becomes dutiable. A question arises as to when capital goods are used for manufacture of dutiable as well as exempted final product, whether for availing capital goods credit, the dutiable as well as exempted final product have to be manufactured simultaneously. In our view this is not necessary, and Cenvat credit would be admissible even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the manufacture of dutiable final product. We are supported in this view by the judgment of Hon ble Gujarat High Court in case of CCE, Vadodara II v. Gujarat Propack reported in 2009 (234) E.L.T. 409 (Guj.), wherein the Hon ble High Court has held that when the capital goods installed in the year 2000 were used for manufacture of exempted goods on trial basis and subsequently were used for manufacture of dutiable goods when regular production was started, the Cenvat credit in respect of capital goods cannot be denied and the Tribunal s judgment in case of M/s. Surya Roshni Ltd. (supra) would not be applicable. In the case of Oswal Woollen Mills Pvt. Ltd. CCE [2012 (284) ELT 240 (Tri.-Del)], CESTAT has held as under:- 5.In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was no mala fide on the part of the appellant in the present case. Further, it is seen that the recovery of the impugned amount was ordered in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of Central Excise Act, 1944. During the relevant period, Section 11A(2B) ibid stated as under:- (2B) Where any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty [on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer] before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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