Ruia Rayon Pvt Ltd. Vs C.C.E & S.T. (CESTAT Ahmedabad)
No credit balance lapse under rule 11(3) as it applies only on absolute exemption notification and not on conditional one
Conclusion: While in terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit was applicable only when the assessee availed the absolute exemption and not on the conditional one.
Held: The issue involved in the present case was that whether the appellant was entitled to carry forward the Cenvat credit after the date of availment of exemption Notification No. 30/2004-CE dated 09.07.2004, in terms of Rule 11(3) of the Cenvet Credit Rules, 2004 and whether the said credit could be utilised for payment of duty. The case of the Department was that as per Rule 11(3) of Cenvat Credit Rules, 2004, if the appellant availed the exemption the Cenvat credit on the stock as on the date of opting for the said exemption Notification No. 30/2004-CE dated 09.07.2004, should stand lapse and consequently, the same could not be utilised for payment of duty. It was held that the Notification No. 30/2004-CE dated 09.07.2004, was admittedly a conditional one. In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit was applicable only when the assessee availed the absolute exemption Therefore, in the present case exemption Notification No. 30/2004-CE dated 09.07.2004, being a conditional one, bar of lapsing of credit should not apply. In light of various precedents, the Tribunal set aside the impugned order and allowed the appeal.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether the appellant is entitled to carry forward the Cenvat credit after the date of availment of exemption Notification No. 30/2004-CE dated 09.07.2004, , in terms of Rule 11(3) of the Cenvat Credit Rules, 2004 and whether the said credit can be utilised for payment of duty. The case of the Department is that as per Rule 11(3) of Cenvat Credit Rules, 2004, if the appellant avail the exemption the Cenvat credit on the stock as on the date of opting for the said exemption Notification No. 30/2004-CE dated 09.07.2004, shall stand lapse and consequently, the same cannot be utilised for payment of duty.
2. Shri Suyog Bhave with Shri Mohit Rawal, Learned Counsels appearing on behalf of the appellant submits that the bar under Rule 11(3) of Cenvat Credit Rules, 2004, is only in respect of absolute exemption Notification and the same does not apply in respect of the conditional exemption Notification. It is his submission that Notification No. 30/2004-CE dated 09.07.2004, is admittedly a conditional notification. Therefore, for availing the said notification the provision for lapsing of credit as provided under Rule 11(3) Cenvat Credit Rules, 2004, does not apply. He further submits that in the present appeals there is a demand towards the utilization of the same Cenvat credit which according to department has lapsed. He submits that since the credit was rightly carry forwarded and the same is not liable to be lapsed the utilisation thereof is in order. Accordingly, the demand towards utilisation of such Cenvat credit will also not sustain.
3. Shri Vijay G. Iyengar, Learned Superintendent (Authorized Representative) appearing on behalf of the revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records. We find that the entire case of the department is that since the appellant have availed the exemption Notification No. 30/2004-CE dated 09.07.2004, they are not entitled to carry forward the accumulated Cenvat credit as on date of exemption Notification. Accordingly, the same was not eligible for utilisation for payment of duty. In the facts of the present case the notification No. 30/2004-CE is admittedly a conditional one. In terms of strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avail the absolute exemption Therefore, in the present case exemption notification No. 30/2004-CE, being a conditional one, bar of lapsing of credit shall not apply. This issue has been considered in various judgments as cited by the appellant, which are reproduced below:
