TMI Blog2022 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that Under sub-rule (4) of Rule 6 of Cenvat Credit Rules, 2004, capital goods Cenvat credit is inadmissible only in respect of those capital goods which are exclusively used in the manufacture of exempted goods. In present case it cannot be said that the capital goods in question had been used exclusively for the manufacture of fully exempted finished products. Though it is alleged in the show cause notice that the appellants have availed credit on input services, the Ld. Counsel for appellants has asserted that the issue is with regard to disallowance of credit on capital goods only. The disallowance of credit cannot be justified - appeal allowed - decided in favor of appellant. - EXCISE APPEAL No.395 of 2011 with EXCISE APPEAL No.431-435 of 2012, EXCISE APPEAL No.40457-40459 of 2013 - FINAL ORDER No. 40014-40022 / 2022 - Dated:- 31-1-2022 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri M.S.Nagaraja, Advocate For the Appellant Shri Arul C. Durairaj, Superintendent (A.R) For the Respondent ORDER The issue involved in all these appeals being the same, they were heard together and are disposed by this com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallow the credit availed on capital goods and for recovery of same along with interest and for imposing penalty. After due process of law, the Ld. Commissioner vide his adjudication order dt. 31.03.2011 has confirmed demand and interest but dropped penalty which is challenged in Appeal No.E/395/2011. 4. In other batch of these appeals (Appeal E/431-435/2012 E/40457-40459/2013), the orders of adjudicating authority in two cases were modified by Ld. Commissioner (Appeals) only to the extent of setting aside the disallowance and recovery of balance 50% capital goods credit originated from earlier dutiable period and rest of the orders were upheld by the appellate authority. Hence these appeals. 5. Ld. Counsel Shri M.S. Nagaraja appeared and argued for the appellant. He submitted that appellants were clearing cotton yarn for domestic area at Nil rate of duty under Notification No.30/2004-CE dated 09.07.2004 and they did not avail cenvat credit on inputs as per the condition of the exemption notification. The appellant exported cotton yarn on payment of Central Excise duty @ 4% (cotton yarn not containing any other textile material) in terms of Notification No.29/2004-CE dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der : SECTION 5A. Power to grant exemption from duty of excise. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon : Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured - (i) in a free trade zone or a special economic zone and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and [brought to any place in India. Explanation. - In this proviso, free trade zone , special economic zone and hundred per cent export-oriented undertaking shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E New Delhi - 2001 (130) ELT 405 (SC) 3) CCE Vs Indian Petro Chemicals - 1997 (92) ELT 13 (SC) 14. In the show cause notice, the department has invoked Rule 6 (4) of CCE to deny credit on capital goods alleging that the capital goods have been exclusively used in the manufacture of exempted goods. In the instant case, cotton yarn was exported on payment of duty @ 4% under the Notification No.59/2008-CE dated 07.12.2008 and cleared at Nil rate of duty in Domestic Tariff Area. Therefore, the capital goods have been used in the manufacture of exempted goods as well as the dutiable gods. Credit is thus available on capital goods not used exclusively in the manufacture of exempted goods. 15. He submitted that the issue in the present appeals are squarely covered by the decisions of the Tribunal in the case of S.T.Cotton Exports (P) Ltd. Vs CCE Ludhiana - 2010 (261) ELT 807 (Tri.-Del.). The said decision was upheld by the Punjab Haryana High Court as reported in 2011 (268) ELT 318 (P H). Similar decision was taken by the jurisdictional High Court in the case of Sudan Spinning Mills (P) Ltd. Vs CCE Madurai - 2019 (368) ELT 953 (Mad.) and prayed that the appeals may be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of specific provision under sub section (1A) of Section 5A of the Central Excise Act. The Law Ministry has accordingly concluded that in view of the specific bar provided under sub-section (1A) or section 5A of the Central Excise Act, the manufacturer cannot opt to pay the duty under notification 59/2008-CE dated 7.12.2008 and he cannot avail the cenvat credit of the duty paid on inputs. Since the Board has accepted the afore-said opinion of the Law Ministry and further directed the field formations to decide the pending issues in the light of the opinion expressed as above, the undersigned, being an authority functioning under the administrative jurisdiction of the Board, has no option but to follow the instructions as conveyed. In view of the acceptance of the Law Ministry's opinion by the Board, the question of applicability of the Trade Notice issued by the Coimbatore Commissionerate does not arise. It is, therefore clear that Bannari was not entitled to avail credit of duty paid on input services and capital goods by opting to pay duty under Notification No.59/2008-CE when Notification NO.29/2004-CE as amended by Notification No.58/2008-CE granted absolution un-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) is unambiguous and principles of harmonious construction cannot be applied in the instant case in view of specific provision under sub-section (1A) of Section 5A of the Central Excise Act. The Law Ministry has accordingly concluded that in view of the specific bar provided under sub-section (1A) of Section 5A of the Central Excise Act, the manufacturer cannot opt to pay the duty under notification 59/2008-C.E., dated 7-12-2008 and he can not avail the Cenvat Credit of the duty paid on inputs. 4. The aforesaid opinion of Law Ministry has been accepted by the Board. Pending issues, if any, may be decided accordingly. 10 . In direct contradiction to the above, the Board has issued Circular No. 99/2008, dated 11-12-2008 in response to a query by the Southern India Mills Association, Coimbatore, clarifying that where the levy of duty is covered by more than one Notification, the rate more beneficial to the assessees will have to be extended, subject to the assessee satisfying all conditions imposed thereunder. The aforesaid Notification reads as follows : ALL MEMBER MILLS : Sub : Fiscal Stimulus package - Central Excise Duty - Reg., Ref : Association Circular No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thrust a Notification of its choice upon the assessee. 13. I am supported in this view by two judgments of the Supreme Court in the case of H.C.L. Limited v. Collector of Customs, New Delhi, [2001 (130) E.L.T. 405 (S.C.)] and Collector of Central Excise, Baroda v. Indian Petro Chemicals [1997 (92) E.L.T. 13 (S.C.)] where the Full Bench and Division Bench of the Supreme Court respectively have categorically confirmed the position that the option to elect and select the benefits provided under Notification is clearly within the realm of choice of an assessee. Circular No. 937/27/2010-CX., dated 26-11-2010, thus does not set out the correct position in law. 14. In the light of the above discussions, this Writ Petitions are allowed and the impugned orders are quashed. No costs. Consequently, connected Miscellaneous Petitions are closed. 20. The issue in these appeals with regard to simultaneously availing the benefit of Notification 29/2004 as amended by Notification 58/2008 and another Notification 59/2008 during the disputed period (07.12.2008 to 06.07.2009) has been considered in the above decisions and found in favour of assessee. The Board circular dt.26.11.2010 which h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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