Case Law Details
Wearit Global Ltd. Vs C.C.E. (CESTAT Delhi)
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 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.
FULL TEXT OF THE CESTAT DELHI ORDER
The present appeal is against the order No.UDZ-EXCUS-000-COM-0019-16-17 dated 24.08.2016 passed by the Commissioner, Central Excise & Service Tax, Udaipur. The appellant is engaged in manufacture of yarn falling under Chapter 35 of First Schedule of Central Excise Act, 1985. The appellant has also been availing Cenvat Credit on the inputs and have sought to avail the benefit of exemption in terms of Notification No.30/2004 dated 09.07.2004 with respect to the unutilized balance of Cenvat Credit lying in the credit account as on 1st of April, 2014. The Department has asked for the same to be lapsed in view of contravention of Rule 11 (3) (i) & (ii) of Cenvat Credit Rules, 2004 (CCR) in as much as the appellant had not struck off balance of Cenvat Credit lying in the account at the time of opting for exemption from payment of whole of excise duty, under the said notification. Accordingly, a show cause notice dated 5th September, 2015 was served upon the appellant and the lapse as above has been confirmed vide the impugned order. Hence the present appeal.
2. We have heard Mr. Manish Saharan, ld. Advocate for the appellant and Ms. Tamana, ld. DR for the Department.
3. Advocate for the appellant while relying upon the decision of Jansons Textile Processors vs. Commissioner, Central Excise & ST Salem – 2018 (7) TMI 850 (CESTAT), Chennai has submitted that the present case is squarely covered under the said decision. Actually Rule 11 sub rule (1) of CCR is applicable to him. It is impressed upon that decision under challenge has wrongly relied upon Rule 11 sub rule (2) of CCR while denying utilization of the unutilized credit with the appellant. Order is accordingly prayed to be set aside and appeal is prayed to be allowed.
4. Ld. DR while justifying the impugned order has impressed upon findings in para 21.2 thereof. It is impressed upon that the adjudicating authority has clearly explained about the applicability of Rule 11(2) in the present case. Appeal is accordingly prayed to be rejected.
5. After hearing 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.
6. We draw our support from the decision of CESTAT-Chennai in the case of Janson Textile Processors Vs. Commissioner of Central Excise & ST Salem wherein it was held as follows:-
“5.1 The core issue that comes up for decision is whether the transitional provisions contained in sub-rule (3) of Rule 11 will be applicable to both sub-rules 3 (i) and 3 (ii). For better understanding, the relevant provisions relating to manufacturers are reproduced as under :
“RULE 11. Transitional provision. —
…. …. …..
(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
(ii) the said final product has been exempted absolutely under section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported.‖
5.2 It is pertinent to note that the sub-rule 3 (i) and sub-rule 3 (ii) are separated by a semicolon ( ; ) followed by the disjunctive ‚or‛. The use of semicolon ( ; ), the punctuation mark is to separate two closely related independent clauses. ‚Or‛ is a ‗particle‘ used to connect words, phrases or classes representing alternatives [ J. Jayalalitha Vs UOI – (1999) 5 SCC 138 ]. Only if the phrasing of the legal provision is such that in actuality ‚and‛ is intended, should it be examined whether the alternatives separated by ‚or‛ are not mutually exclusive. The Courts may construe ‚or‛ as ‚and‛, only if they find from the context that the wrong word must have been used. [Ranchhoddas Atmaram v. UOI, AIR 1961 SC 935; Firoj Farukee v. State of West Bengal, AIR 1972 SC 2141] . However, in respect of the sub-rule 3 (i) and sub-rule 3 (ii) ibid, there should not be any such confusion or doubt, since those two sub-rules are separated not by just a particle ‚or‛ but also by a semicolon (;), thus creating an additional wall for conveying mutual exclusivity between the two sub rules. There is also no basis for suggesting that the use of ‚or‛ between these sub-rules conveys the meaning ‚or both‛. For example, to be able to impose both a fine and a penalty, one would need to add ‚or both‛ to the end of the phrase. That surely is not the case here.
5.3 Viewed in this context, it is but obvious that the legislature intended the said sub rules 3 (i) and 3 (ii) to be two distinct and separate alternatives, with distinctively different qualifying factors and conditionalities.
5.4 In sub rule 3 (i), the assessee has an option to avail of a particular notification or otherwise; when such assessee takes such option, he will be required to pay an amount equivalent to cenvat credit, if any,
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6. In the event, the findings and decision of the lower appellate authority to the contrary in the impugned order is not on sound legal footing. The impugned order then cannot sustain and will require to be set aside, which we hereby do. Appeal is allowed with consequential benefits, if any, as per law.‖
7. Following these 2 decisions and indulging the facts at length, we are of the considered opinion that the ratio laid down in the judgments are squarely applicable in this case and therefore, we allow the appeal.
[Dictated and pronounced in the open Court]
