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TMI Blog2025 (1) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... th Section 11AC of the Act. 2. Briefly stated, facts are that the appellant, a manufacturer of 100% cotton yarn, during the period 2009-10 to 2011-12, cleared the goods on payment of duty under notification No.29/2004 CE dated 09.07.2004 as amended, for export claiming rebate and simultaneously availed exemption under notification No.30/2004-CE dated 09.07.2004 for the export of 100% cotton yarn and also for domestic clearances. They availed cenvat credit of duty paid on capital goods and service tax paid on input services and utilized the credit for payment of duty on finished products, i.e. on export of the said goods under claim of rebate of duty. They did not avail cenvat credit duty on inputs. The appellant used common input services in the manufacture of dutiable as well as final products which were exempted(exported). They were paying an amount of credit attributable to input services used in or in relation to the manufacture of exempted goods in terms of Rule 6(3) (ii) of CCR read with Rule 6(3A) of the rules ibid. For arriving at the amount of cenvat credit for reversal in terms of Rule 6(3A) of CCR, in so far as a manufacturer of exempted goods was concerned, the formula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set aside with consequential relief. It is his submission that when the demand itself is unsustainable, the question of interest and penalty does not arise. He further submits that there is no element of wilful suppression of facts or misdeclaration and the issue is entirely interpretational and the demand raised invoking the extended period is not sustainable. 4. Ld. Authorised Representative Shri. M. Selvakumar represented the department and reiterated the reasons and resultant findings as recorded by the lower authorities. 5. Heard both sides, perused the appeal records and case laws submitted and relied on. On perusal of the impugned order in appeal as well as the case laws submitted, this Tribunal finds that a division bench of this Tribunal, in the case of Sivaraj Spinning Mills Pvt Ltd v. Commissioner of GST & Central Excise, Madurai, 2024 (8) TMI 990 CESTAT Chennai, in a similar fact situation of the appellant therein clearing cotton yarn on payment of duty under Notification No. 29/2004-CE dated 09.07.2004 and clearing cotton yarn at nil rate as per Notification No. 30/2004 - CE dated 09.07.2004, simultaneously, after discussions, has rendered the decision in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is eligible to avail CENVAT credit of duty paid on the said inputs and input services under Rule 6(1) of the CENVAT Credit Rules, 2002/CENVAT Credit Rules, 2004, used in the manufacture of such exempted goods, even if such goods are exported." After a detailed discussion, the Hon'ble High Court in paragraph 20 has answered the question as under : "20. In view of the above discussion, we hold that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. Question No. 1 is answered accordingly." Thus, it was held that even if the exempted goods are exported, credit is eligible. 6.3.2 Now, the question is whether the amendment brought forth to do away with the requirement to execute a bond while exporting exempted goods would change the situation. The Tribunal in M/s. Jolly Board Ltd. (supra) had occasion to consider the issue post amendment vide Notification No. 42/2001. In paragraph 7 of the said judgement, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em Cenvat credit availed in view of the provisions of Rules 6(1) and 6(2) of the Cenvat Credit Rules, 2004, which are reproduced hereunder :- "(1) The Cenvat credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2). (2) Where a manufacturer or provider of output service avails of Cenvat credit in respect of any inputs or input serviced, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take Cenvat credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable." Cenvat credit has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AR is not relevant to the present case. In these circumstances, the learned Commissioner's order is not sustainable and the same is accordingly set aside and the appeal is allowed." The said view has been reiterated in the case of M/s. GPI Textiles Ltd. ( supra ). 6.4 From the discussions made above and also following the decisions cited supra, I am of the view that the credit availed on input services is eligible and the contention of the Department that the credit has to be reversed is against the provisions of law. The first issue is therefore found to be in favour of the appellant. 6. It is further seen that in the impugned Order in Original, the adjudicating authority has placed reliance on the decision of the Commissioner of Central Excise (Appeals), Madurai given in OIA No.146/2014-CE dated 23.12.2014 in the case of M/s. Velayudhaswamy Spinning Mills Ltd, Dindigul. The said OIA is seen set aside and the matter decided in favour of the appellant therein vide Final Order No.41148 & 41149/2024 of a coordinate bench of this Tribunal in the case of M/s. Sri Velayutham Spinning Mills (P) Ltd v Commissioner of GST & Central Excise, Madurai and M/s. Prabhu Spinning Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X
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