Case Law Details
Eastern Chemofarb Limited (DTA Unit) Vs Commissioner of Central Excise (CESTAT Kolkata)
The issue under consideration is whether the lower authority is correct in stating that the appellant is not entitled to avail credit of duty paid on inputs used in the manufacture of exempted goods since they have cleared the said exempted goods for export outside India?
CESTAT states that, in the instant case, the issue regarding the eligibility to avail credit is to be decided. Since the final product is exempted from payment of Central Excise duty no duty liability arises even if the same is cleared for domestic consumption. However, the appellant has cleared the said exempted goods for export outside India. The general provisions contained in Credit Rules provides that credit is not allowed to be claimed on inputs if the same is used in manufacture of exempted goods as would be clearly discernible on perusal of Sub-Rule (1) to (4) of Rule 6. However, Sub-Rule (6) of Rule 6 carves out an exception to provide that if the goods are cleared to SEZ or a 100% EOUs, EHTP, etc the restrictions contained in the said rules shall not apply, clearly implying that final products which have been exported would not be denied of the input credit benefit. Provision has also been made in Rule 6(6)(v) to state that goods cleared for export under bond in terms of Central Excise Rules shall also not be denied input credit, which also clearly implies that assessee shall be allowed to avail credit on inputs used in exported manufactured goods. CESTAT find that subsequent amendment made in Notification No.42/2001 (Supra) to do away with the requirement of following the bond related procedure in case of goods which are otherwise chargeable to ‘NIL’ rate of duty or wholly exempted is merely a procedure and has no relation whatsoever with the credit entitlement under Credit Rules. The disallowance of credit by both the authorities below in the instant case is not proper. Hence, in view of the above discussions, CESTAT hold that the appellant is duly entitled to avail credit and therefore, the impugned duty demand is not sustainable. The appeal is thus allowed with consequential relief.
FULL TEXT OF THE CESTAT JUDGEMENT
The instant appeal has been filed by the appellant assessee, M/s. Eastern Chemofarb Ltd, against Order-in-Appeal dated 04.05.2018 passed by the learned Commissioner (Appeals), Kolkata, upholding demand of Central Excise duty of Rs. 4,94,115.80 consequent to denial of Cenvat credit for the period from April 2011 to December 2011 vide Order dated 28.02.2013 passed by the learned Dy. Commissioner, Central Excise, Asansol.
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