Case Law Details
Union of India Vs Kanchan India Limited (Rajasthan High Court)
In the present case appellant has opted for exemption as per the Notification No.30/2004-CE where the exemption is conditional. As per Rule 11(3) (ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No.30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11(3)(1) of CCR would apply which does not mandate any such lapsing.
In the present case , the goods are conditionally exempt, as is evident from S. No. 10 of the notification no.30/2004. As the goods are not absolutely exempt and the exemption is granted only on fulfillment of certain conditions, clearly Rule 11(3) (1) of the Rules of 2004 would apply.
In the present case as well, the exemption is not absolute but conditional upon fulfillment of certain stipulations. The assessee was entitled to the benefit of Rule 11 (3)(i) of the Rules of 2004.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The question of law suggested by the Revenue in the present case involves interpretation of Rule 11(1) of the Cenvat Credit Rules, 2004 (for short, ‘the Rules of 2004’).
2. The assessee-respondent had resisted a show cause notice which sought to invoke Rule 11(3) and lapsed Cenvat Credit on the ground that the final product was duty exempt by virtue of notification No.30/2004 dated 09.07.2004. The show cause notice was made absolute and the Cenvat Credit was directed to lapse.
3. The CESTAT which issued the impugned order in the appeal preferred by the respondent-assessee relied upon its previous order in Jansons Textile Processors. vs. Commissioner, Central Excise & ST Salem – 2018 (7) TMI 850 (CESTAT), Chennai. That case too was concerned with the exemption availed by the assessee in terms of the notification no.30/2004. The CESTAT pertinently held as follows :-
“5. After haring both the parties, we are of the opinion that in the present case the appellant has opted for exemption as per the Notification No.30/2004-CE where the exemption is conditional. As per Rule 11(3) (ii) CCR, Cenvat Credit balance will lapse only if the product is exempted absolutely under Section 5A of Central Excise Act. But since the Notification No.30/2004-CE dated 09.07.2004 is a conditional notification, hence only Rule 11(3)(i) of CCR would apply which does not mandate any such lapsing.”
4. In the present case too, the goods are conditionally exempt, as is evident from S.No.10 of the notification no.30/2004. As the goods are not absolutely exempt and the exemption is granted only on fulfillment of certain conditions, clearly Rule 11(3) (i) of the Rules of 2004 would apply. The said Rule reads as follows :-
“(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if,-
(i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or”
5. In the present case as well, the exemption is not absolute but conditional upon fulfillment of certain stipulations. The assessee was entitled to the benefit of Rule 11(3)(i) of the Rules of 2004.
6. The Court is, therefore, of the opinion that no substantial question of law arises in this appeal. The present appeal is accordingly dismissed.
