Case Law Details
Synfab Sales And Industries Ltd. Vs C.C.E & S.T. (CESTAT Ahmedabad)
From the plain reading of the above rule 11(3) (i) (ii) it is clear that in terms of Clause (ii) of Rule 11(3) the balance credit shall lapse only if the assessee availed an exemption which is absolutely and exempted which is other than absolute covered under clause (i) of Rule 11(3). In case of clause (i) of Rule 11(3) no similar condition of lapsing of balance cenvat credit is provided. In the present case undisputedly the appellant have availed the benefit of Notification No 30/2004-CE which is a conditional one and the said condition prescribed is ―provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs has been taken under the provision of the Cenvat Credit Rules, 2002‖.
Since the Notification No. 30/2004-CE dated 09.04.2007 contains the above condition the notification is not absolutely therefore, the situation of the appellant is covered under Rule 11(3)(i) according to which the appellant is required to pay an amount equivalent to Cenvat Credit, if any taken by him in respect of inputs received for used in the manufacture of said final product and is lying in stock or in process or is contained in the final product or lying in stock but if the Notification is absolutely having no condition in terms of Rule 11(3)(ii) the remaining credit shall lapse and shall not be allowed to be utilized. The case of the appellant is covered by rule 11(3) (i) therefore, the remaining credit shall not lapse. One of the contention by the adjudicating authority is that even though the argument of the appellant that the Cenvat credit balance will lapse as per Rule 11(3) only, the product is exempted absolutely is accepted there is no dispute that Notification No. 30/2004-CE has been issued under section 5A of the Central Excise Act, 1944 and the appellants having opted for the same, cannot escape from the obligation relating reversal of balance Cenvat Credit.
In the section 5A in Sub-section (1) exemption is of two category one is exemption which exempt the goods absolutely and other is subject to such condition as specified in the Notification. In terms of Sub-section (1A) which makes clear distinction that in case of exemption granted absolutely the manufacturer of excisable goods shall not have any option except to pay the duty. The only option is to avail the exemption and no duty shall be paid. Therefore there is a clear distinction between an absolute exemption and conditional exemption. Therefore, the contention of the adjudicating authority that since the exemption notification was issued under section 5A the appellant is otherwise required to pay balance credit is of no substance and has no basis.
We find that this issue has been considered by the tribunal time and again and after interpreting Rule 11(3) (i) and (ii) came to conclusion that in case of conditional notification the assessee is not required to lapse the remaining credit after reversal on input as such, input in process and input contained in finished goods
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