Commissioner Of Central Excise & S.T., ... vs M/S. Bhoomi Textiles

(Arising out of OIA-145/2007-AHD-I dated 30.03.2007, passed by Commissioner (Appeals) Central Excise & Service Tax, Ahmedabad)

Commissioner of Central Excise & S.T., Ahmedabad : Appellant (s)

VERSUS

M/s. Bhoomi Textiles : Respondent (s)

Represented by :

For Appellant (s) : Shri Alok Srivastava, Authorised Representative

For Respondent (s) : Shri P.M. Dave & Shri Paritosh Gupta, Advocates

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

Date of Hearing / Decision : 24.06.2015

ORDER No. A/10860/2015 Dated 24.06.2015

Per : Mr. P.K. Das;

Revenue filed this appeal against the order of the Commissioner (Appeals), where the adjudication order was set-aside.

2. After hearing both the sides and on perusal of the records, we find that respondents were engaged in the manufacture of Processed Fabrics and availed benefit of exemption Notification No. 29/2004-CE dated 09.7.2004 as well as Notification No. 30/2004-CE dated 09.7.2004. The Notification 29/2004-CE prescribes duty at the rate of 4% Advelorem and CENVAT credit is admissible. Notification No. 30/2004-CE provides Nil rate of duty and CENVAT credit would not be admissible. The Respondent during the period from August 2004 to June 2005, reversed the proportionate input credit of Rs. 8,01,977/- for the basic excise duty and for Rs. 15,257/- towards education cess, where they availed exemption under Notification No. 30/2004-Central Excise. The demand was raised on the ground that they have availed credit initially and reversed subsequently, which is not permissible.

3. We find that the issue has already been decided by the Hon'ble Gujarat High Court in the case of CCE vs. Ashima Dyecot Limited  2008 (232) ELT 580 (Guj.) and dismissed the appeal filed by the Revenue. The relevant portion of the said decision is reproduced below:-

7. Even Rule 6(3) of the Cenvat Credit Rules, 2004 says that notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely :-

(a) if the exempted goods are -

(i) xxx xxx xxx xxx

(ii) xxx xxx xxx xxx

(iii) xxx xxx xxx xxx

(iv) xxx xxx xxx xxx

(v) xxx xxx xxx xxx

(vi) final products falling within Chapter 50 to 63 of the said First Schedule;

xxx xxx xxx xxx xxx xxx xxx xxx Even otherwise, Rule 3 says that the manufacturer or producer of the final product or provider of output services shall be allowed to take credit on various items enumerated therein.

This issue had come up for consideration before the Allahabad High Court in the case of Hello Minerals Water (P) Ltd. v. Union of India, reported in 2004 (174) E.L.T. 422 (All.), wherein it is held that reversal of Modvat credit amounts to non-taking of credit on the inputs. Hence, the benefit has to be given of the notification granting exemption/rate of duty on the final products since the reversal of credit on the input was done at the Tribunals stage. While arriving at this conclusion, the Allahabad High Court has referred to various judgments under which such reversal was made subsequently and still the benefit was given to the assessee.

4. The Hon'ble Supreme Court upheld the decision of Hon'ble Gujarat High Court, and reported at 2009 (240) ELT A41 (SC), it has been held that the reversal of credit would amount to non-availment of credit under Notification No. 30/2004-CE. So, we do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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