TMI Blog2017 (3) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... lly used in the exempted goods but at the time of clearance of the exempted goods, they have reversed the credit - the appellants have complied with the condition of N/N. 30/2004-CE - appeal allowed - decided in favor of assessee. - E/1134/06 & E/3392/06 & E/CO/251/07 - A/85917-85919/17/EB - Dated:- 16-2-2017 - Shri Ramesh Nair, Member (Judicial) And Shri C.J. Mathew, Member (Technical) Shri M.H. Patil, Advocate for the appellant assessee Shri S.V. Nair, Asstt. Commissioner (AR) for the revenue respondent ORDER Per Ramesh Nair The brief facts of the case are that the appellants are engaged in the manufacture of excisable goods falling under Chapter 51 52 of the Central Excise Tariff Act 1985 viz. Wool Tops (5105.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been taken under the provisions of Cenvat Credit Rules, 2002. Accordingly, by taking the credit at the time of receipt of the inputs this condition was violated. The show-cause notice was issued whereby the exemption was proposed to be denied and consequently, differential duty was proposed to be demanded. In the adjudication, the adjudicating authority confirmed the demand of ₹ 57,50,506/- and also demanded interest under Section 11AB of the Central Excise Act, 1944. Therefore, appellants are before us. The revenue is also in appeal for non imposition of penalty in the impugned order. 2. Shri M.H. Patil, ld. counsel for the assessee submits that even though the cenvat credit was taken at the time of receipt of the inputs but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erates the findings of the lower authorities. He submits that there is a clear condition in notification no. 30/2004-CE that the notification shall not apply if the assessee avails the cenvat credit on the input under Cenvat Credit Rules, 2004. It is settled by Hon'ble Supreme Court in various judgments that any condition provided in the notification should be strictly followed, otherwise the exemption notification shall not be applicable. Accordingly, on violation of condition of notification the exemption notification is not available to the appellant. The lower authorities have rightly denied the exemption and confirmed the demand which is sustainable. He placed reliance on the Board circular no. 796/28/2004-CX dated 28.07.2004. As r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption and subject to the assessee not claiming CENVAT credit before claiming exemption. The question of exemption from payment of duty on grey fabrics arose on satisfaction of the said two conditions. In this case, payment of duty on yarn on deferred basis took place before clearance of grey fabrics on which exemption was claimed. Therefore, payment was made before the stage of exemption. Similarly, on payment of duty on the input (yarn) the assessee got the credit which was never utilized. That before utilization, the entry has been reversed which amounts to not taking credit. Hence, in this case, both the conditions are satisfied. Hence item no. 1 of the table to Notification No. 14/2002-C.E. would apply and accordingly the grey fabrics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal product manufactured on the very day that it becomes available. 5. As per the above decision, the Apex court held that if the credit is reversed without utilisation at any stage, the notification should be allowed. Accepting the view of the Supreme Court judgment, the Board also clarified the issue. The said circular is reproduced below:- Circular No. 858/16/2007-CX, dated 8-11-2007 Subject : Clarification regarding Circular No. 845/03/2007-CX, dated 1-2-2007 I am directed to invite your attention to Board s Circular No. 845/03/2007-CX dated 1-2-2007 [2007 (208) E.L.T. T15]. In para-2 of the said circular, it was clarified that non-availment of credit on inputs is a precondition for availing exemption under Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent that in case, credit taken on inputs used in the manufacture of the said goods cleared under Notification No. 14/2002-C.E. or Notification No. 30/2004-C.E., has been reversed before utilization, it would amount to credit not having been taken. From the above circular also, the Board has clarified that if the credit of inputs used in the exempted goods under notification no. 30/2004 is reversed before utilisation, it would amount to credit not having been taken. Accordingly, the condition of the notification stands meet out. In the present case, the fact is not under dispute that the appellant availed the credit at the time of receipt of the inputs which was partially used in the exempted goods but at the time of clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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