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CX - Reversal of credit subsequently is no ground for denying benefit of notification 30/2004-CE : CESTAT

By TIOL News Service

MUMBAI, AUG 12, 2017: THIS is a Revenue appeal.

It was the case of Revenue that the respondent had availed CENVAT credit on the common inputs which are used for the manufacture of textile and textile articles and accordingly, they are not eligible for the benefit of the notification 30/2004-CE whereas the assessee contended (and which contention was accepted by the Commissioner(A)) that having reversed the CENVAT credit they had satisfied the condition of non-availment and are, therefore, entitled to the exemption. Support was drawn from the apex court decision in Chandrapur Magnet Wires (P) Ltd - 2002-TIOL-41-SC-CX.

As mentioned, Revenue is in appeal before CESTAT and submits that the conditions of the notification No. 30/2004-CE are very clear and the said conditions implied that respondent should not have availed CENVAT credit on the inputs; that the Supreme Court in the case of Eagle Flask Industries Ltd - 2004-TIOL-74-SC-CX; Mahaan Dairies - 2004-TIOL-52-SC-CX have specifically laid down that exemption notification should be strictly construed and conditions thereof should be complied if assessee wishes to avail the benefit of the same.

The respondent submitted that identical issue has been decided in favour of the assessee (in cases of Spentex Industries, Omkar Textile Mills ) holding that once the credit attributable to the inputs used in the goods cleared by availing benefit of Notification No. 30/2004-CE is reversed, the conditions of the notification are met.

The Bench observed –

"6. …, we find that Revenue's appeal is devoid of merits for more than one reason. Firstly, there is no dispute that the respondent had reversed the CENVAT credit attributable to the inputs which are consumed in the manufacture of final goods which are cleared by availing benefit of Notification No. 30/2004-CE. The said notification No. 30/2004-CE only states about non-availment of the CENVAT credit of the duty paid on inputs. Reversal of credit subsequently by the respondent is accepted and such reversal of credit is held as satisfying the conditions of the notification…"

Noting that the case laws cited by the appellant are directly on the issue and binding on the Bench, the Revenue appeal was rejected but not before observing that the case laws cited by the AR were based on totally different facts.

(See 2017-TIOL-2907-CESTAT-MUM)


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