TMI Blog2022 (8) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... r manufacture of exempted goods - It is to be noted that a manufacturer is given an option to avail the benefit of Notification 30/2004. It does not make the goods completely exempted from payment of duty. If the manufacturer avails credit on inputs, then he cannot avail the benefit of the exemption provided under Notification No. 30/2004. Rule 6(4) bars the availment of credit on capital goods which are used exclusively in the manufacture of exempted goods. As per Rule 2(d) of CENVAT Credit Rules, 2004 exempted goods means excisable goods which are exempt from the whole of duty of excise leviable thereon, and includes goods which are chargeable to nil rate of duty . Thus, the goods cleared under Notification No.30/2004 without payment of duty is optional payment without duty and it cannot be said that these fall within the definition of exempted goods . Later, the appellant had availed the benefit of Notification No. 29/2004. As per this Notification, the domestic clearances get the benefit of concessional rate of duty. The department has denied the credit availed on capital goods for the period after 10.6.2010 alleging that though the appellant has paid duty on domestic cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants are manufacturers and exporters of 100% cotton yarn dyed woven fabrics falling under CETH 52084130 of CETA, 1985. They were availing the CENVAT credit facility in respect of capital goods from 10.6.2010 onwards. The credit was availed and utilized to pay duty on export goods exported in terms of Notification No. 29/2004-CE dated 9.7.2004. On verification of the credit taken and utilized, it was observed that on 10.6.2010, the appellant had taken credit at a single stroke of sum of Rs.20,45,725/- on imported capital goods which were mainly spares. The credit so availed was utilized only to pay duty of export clearances. This CENVAT credit was availed on capital goods which were received in the factory from April 2007 to June 2010. They then started using the credit availed on capital goods to pay duty on exported goods from the month of June 2010. For the period prior, i.e. from June 2007 to 9.10.2010, the appellant had opted for full duty exemption on all clearances (domestic clearance and export clearance) in terms of Notification No. 30/2004-CE dated 9.7.2004. Originally for the period prior to 10.6.2010, the appellant had not taken any credit on capital goods or inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the original authority confirmed the demand along with interest and imposed penalty. 5. Aggrieved by the above orders, the appellant filed appeals before Commissioner (Appeals) who vide common order, which is impugned herein, upheld the confirmation of demand, interest and penalty. Aggrieved, the appellant is now before the Tribunal. 6. The learned counsel Shri M.N. Bharathi appeared for the appellant. He explained that the appellant imported capital goods, spares and accessories of capital goods on various dates for use in the manufacture and export of finished products. 7. Initially, the appellants were availing the benefit of full exemption in terms of Notification No.30/2004-CE dated 9.7.2004 for the period from June 2007 till June 2010. The appellant made domestic clearances as well as export clearance without payment of duty in terms of Notification No. 30/2004. As per this notification, the goods cleared are exempted from payment of duty even though credit has been availed on capital goods. To be more clear, he stressed that the notification does not bar availment of credit of duty paid on capital goods. He adverted to the Corrigendum to Notification No. 30/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No.30/2004-CE was analyzed by the Tribunal in the case of CCE, Madurai Vs. Eastman Spinning Mills P. Ltd. reported in 2011 (271) ELT 256 (Tri. Chennai). It was held by the Tribunal that Rule 6(4) of CENVAT Credit Rules, 2004 bars availment of credit on capital goods used exclusively in the manufacture of exempted goods whereas Notification No. 30/2004 is only an optional exemption enabling a manufacturer to clear the goods either without payment of duty or on payment of duty. For this reason, it cannot be said that the capital goods are exclusively used in the manufacture of exempted goods. The said decision was followed in the case of Oswal Woollen Mills Ltd. Vs. CCE, Ludhiana reported in 2012 (284) ELT 240 (Tri. Del.). 9. It is also alleged by the department that the goods which are exported have to be treated as exempted goods. It is submitted that this view taken by the authorities below is highly erroneous as the goods which are exported are not exempted goods. The provisions of Rule 6(4) of CENVAT Credit Rules, 2004 will not apply to goods which are exported. This is clear from Rule 6(6) of CENVAT Credit Rules, 2004. 10. Subsequently from 10.6.2010, the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period prior to 10.6.2010, the appellant was not paying duty either for exempted goods for home consumption or goods exported. They were availing the benefit of both notifications 30/2004 and 29/2004 which cannot be allowed. 13. The appellant filed rebate claims for the period January 2006 to June 2007 which was rejected by the adjudicating authority. They filed appeals before Commissioner (Appeals) who allowed rebate claims. Against such order, the department filed revision application before Revisionary Authority, Government of India. The appeal filed by the department was allowed whereby the Revisionary Authority held that at the time of receipt of capital goods in the factory, final product was cleared without payment of duty by claiming full exemption under Notification No. 30/2004-CE. The capital goods having been used exclusively in the manufacture of exempted goods, the credit is not eligible. 14. She relied upon the decision of the Tribunal in the case of CCE Vs. Surya Roshni reported in 2003 (155) ELT 481 and argued that the eligibility of credit on capital goods has to be determined at the time of receipt of the goods into the factory. The said decision was uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the definition of exempted goods . The said issue was discussed by the Tribunal in the case of Eastman Spinning Mills P. Ltd. (supra) which reads as under:- In this case, a demand of Rs. 1,99,749/- representing wrongly availed CENVAT credit on capital goods used in the manufacture of exempted cotton yarn during the period 9-7-2004 to 31-3-2007, was confirmed together with interest and equal amount of penalty was imposed by the adjudicating authority, whose order was set aside by the Commissioner (Appeals); hence this appeal by the Revenue. 2. I have heard both sides. Initially, the proviso to Notification No. 30/2004, dated 9-7-2004 by which goods falling under specified sub-headings of Chapter 52 of the First Schedule to the CETA, 1985 (the assessee is a manufacturer of cotton yarn falling under one of the specified sub-headings of Chapter 52), provided that nothing contained in the notification would apply to the goods in respect of which credit of duty paid on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002. On the same date of the issue of the above notification viz 9-7-2004 a corrigendum was issued so as to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration under Rule 57G and availed credit of duty paid on the inputs. It was alleged that the appellants cleared polyester stable fibres weighing 20,017.80 Kgs. without payment of duty for export. Since the polyester staple fibres so cleared were not exported directly by the appellants. It was alleged that they are not entitled to avail credit of duty under Modvat scheme. Accordingly a show cause notice was issued to the appellants asking them to explain as to why an amount of Rs. 1,46,930/- taken credit by the appellants wrongly should not be recovered under Rule 57-I read with Section 11A. In reply to the SCN, the appellants submitted that removal of the goods without payment of duty is not exempted; that utilisation of credit is in order; that the bar under Rule 57C does not cover removal of the goods without payment of duty under Rule 191B; that in the facts of the case neither Rule 57C nor Rule 57G can be invoked to deny Modvat credit; that Rule 57-I is not applicable in the facts of the present case. The appellants contended that in view of the notification issued under Rule 191B specified excisable goods for the manufacture of articles in bond for export the said articles ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue that was considered by the Division Bench of the Tribunal is the same as in the present case. The relevant portion is reproduced as under:- 3. The Ld. Counsel for the appellants submitted as follows :- (i) The benefit of Notification No. 30/2004 has been availed by the appellants in respect of domestic clearances. Exports made up to 18-2-2014 were made by under the Letter of Undertaking, in lieu of bond. Exports made subsequent to this date were made by mentioning the Notification No. 30/2004, without executing LUT. He submitted that the goods cleared for export cannot be considered as exempted goods, since in any export consignment only the goods are exported and not the taxes. The Rule 6(6)(v) of the Cenvat Credit [Rules], 2004 provides that Rule 6(4) will not be applicable in the case of export under bond. The same dispension is required to be given for the goods exported by the appellant. (ii) To support his contention he relied on the decision of the Hon ble Bombay High Court in the case of Repro India Ltd. v. Union of India, 2009 (235) E.L.T. 614 (Bom.). He further submitted that above judgment was followed by the Hon ble Himachal Pradesh High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under bond in which case the terminal excise duty is not paid at the time of clearance from the factory but in the terms of the bond the manufacturer is obligated to export the goods and get the bond closed. The other option available to manufacturer is to pay the said duty and export the goods and get the excise duty so paid rebated. In any case there is no doubt that the goods manufactured have been partially exported and partially cleared to the domestic tariff area. We are of the view that the benefit of Rule 6(6)(v) is required to be extended to the appellant since the goods have in fact been exported. Consequently, we are of the view that the appellant will be entitled to the Cenvat credit on the capital goods used partially for export even though domestic clearances are exempted. 7. In the result, the impugned order is set aside and appeal is allowed. 20. The issue as to whether the benefit of both the notifications can be availed and the credit on capital goods is eligible was considered by the Tribunal in the case of S.T. Cottex Exports Pvt. Ltd. Vs. CCE, Chandigarh reported in 2010 (261) ELT 807 (Tri. Del.). The decision of the Tribunal was upheld by the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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