TMI Blog2018 (5) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... would require one to interpret as the goods which are fully exempted from duty. Hence, even 2.5% duty of customs will not make the goods “which are exempted from duty’ - the appellant is not exempted from reversing the credit as per Rule 6(3) of CENVAT Credit Rules. Whether the assessee has resorted to fraud, wilful misstatement, suppression of facts or violation of any condition of the Act or Rules, with an intent to avoid payment of duty? - Held that: - it is evident that the assessee had declared both the fact that they have availed the exemption notification and also that they have not reversed any CENVAT credit, in their ER-I returns filed with the department. I do not find that they have suppressed any facts or misstatement or viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2015 was issued to the appellants seeking to appropriate the aforesaid amount and also seeking to impose penalty under rule 15(2) of CCR, 2004 read with Section 11A (4) of Central Excise Act, 1944 and under Section 11 AC ibid. After following due process of law, the Ld. Lower authorities ordered recovery of CENVAT credit and interest and appropriated the amounts already paid in this regard. He also imposed a penalty of ₹ 24,18,000/- under Rule 15(2) read with Section 11 AC of Central Excise Act, 1944. 2. Aggrieved, the appellant filed an appeal before Commissioner (Appeals) who upheld confirmation of demand, both on merits and on limitation and reduced penalty to ₹ 12,09,000/-. Not satisfied with the order of Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, In terms of Notification No. 12/2012-Central Excise, dated the 17th March, 2012; (ix) .........................; (iii) The entire demand arose on the allegation that the exemption under rule 6(6)(vii) is not applicable to the instant case as the impugned clearances were subject to 2.5% BCD in terms of Sl.No. 508 of Notification No. 12/2012-CU, dated 17.03.2012 as amended and therefore the same cannot be considered as exempted goods. Rule 6(6)(vii) does not specify whether the exemption has to be full or partial, and if it is intended to oly goods fully exempted, the notification would have said so. 3. The words goods exempted from tax is not defined in CENVAT Credit Rules 2004 and hence the definition of Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that they have taken inadmissible credit and have not reversed as per rule 6(3) would not have come to light but for the audit. They suppressed the fact and therefore reversal of credit, interest and penalty invoking the extended period of demand and therefore his appeal may be dismissed. 8. I find that the following issues need to be decided. (i) What is the meaning of expression which are exempt from the duties of customs under rule 6(6)(vii) of CENVAT Credit Rules, 2004 does it include only goods which are fully exempted or it also includes the goods which are partially exempted from the customs duty? Consequently, is the appellant required to reverse the credit as per Rule 6(3) of CENVAT credit Rules? (ii) Has appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt would endeavour to eschew literal construction if it produces manifest absurdity or unjust result . I, therefore, find it is prudent to interpret the words goods which are exempted in the context of the scheme of CENVAT credit. The CENVAT Credit scheme has been designed to set off the duty paid on the inputs against the duty to be paid on the final products or services. Wherever no duty is payable on the final products, either because they are exempted or are chargeable nil rate of duty, no CENVAT credit is admissible. This principle has been well established and the rates of duty on the inputs and final products are immaterial. Even if the rate of duty of final products is merely 1% the credit of duty paid on inputs is available. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom reversing the credit as per Rule 6(3) of CENVAT Credit Rules. The second question is whether the assessee has resorted to fraud, wilful misstatement, suppression of facts or violation of any condition of the Act or Rules, with an intent to avoid payment of duty. I find from the records presented during hearing that the assessee in fact had filed returns in ER-I in which under the head duty payable for clearance , they have declared that they have availed the benefit of notification No. 12/2012. Under the head details of CENVAT credit taken and utilised, they have shown the credit utilised for payment of amount in terms of Rule 6 of CENVAT credit Rules as zero. Thus, it is evident that the assessee had declared both the fact that they h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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