ORDER
S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Appeal No. 27/05 dated 19.10.2005 by which the Commissioner has confirmed demands raised by two show cause notices and has imposed equal sum as penalty. The issue pertains to interpretation of Notification Nos. 29 and 30/2004 and as to whether they are eligible for availing benefit of both the notifications simultaneously along with the cenvat credit of duty paid on the inputs used in the manufacture of dutiable and non-dutiable Excisable goods and reversed subsequently. The assessee submits that any provision of 6(3)(vi) of Cenvat Credit Rules 2002 exempts the manufacturers of textile products falling under Chapter 50-63 of the CET from maintaining separate books of accounts. They had applied the provision in letter and spirit of law by reversing the credit taken on the exempted goods and hence, they are eligible for the benefit of the Notifications. However, the Commissioner did not agree with their submissions and denied the benefit of the Notification and confirmed the demands.
2. The learned Counsel submits that the issue is covered by the ruling rendered by this bench in the case of Reid and Taylor by Final Order No. 866/06 dated 5.5.2006 as the appellants had reversed the credit after availing the benefit of the Notification and hence, they are eligible for claiming the benefit. Hence, the learned JCDR submits that the ratio of Reid and Taylor is distinguishable.
3. The learned Counsel submits that the Revenue’s contentions as in this case was raised in the case of Hello Mineral Water (P) Ltd. v. UOI reported in 2004 (147) ELT 422 (All.) and the Tribunal ruling rendered in the case of Tube Investments of India Limited v. CCE 2004 (177) ELT 880 (T) also and these very submission has been overruled by the Tribunal and the High Court. The ruling lays down that once the credit has been reversed before or subsequently, then the benefit of the notification has to be extended. The learned Counsel submits that the ratio of these three rulings clearly applies to the facts of the circumstance of the present case and hence, the appeal has to be allowed. He further submits there is no error in the application of Rule 6(3)(vi) of Cenvat Credit Rules and therefore, there is no illegality or infirmity in availing the benefit.
4. On a careful consideration, we agree with the learned Counsel that the issue is covered in their favour in terms of the ruling rendered by his bench in the case of Raid and Taylorby Final Order No. 866/06 dated 5.5.06. The finding recorded in Para 4 to 6 is reproduced herein below:
4. The learned Advocate relied on the decision of the Apex Court in the case of Chandrapur Magnet Wires (F,) Ltd. v. CCE, Nagpur wherein it is held that, on reversal of Modvat Credit, the assessee cannot be said to have taken credit of duty on the inputs utilized in the manufacture of the exempted final products. Consequently, exemption from duty is not deniable to final product even if the exemption Notification stipulates a condition that exemption to final product is not available where Modvat credit under Rule 57A taken on inputs used in the manufacture of final products in question. In the above case, the Supreme Court has set aside the decision of the CEGAT denying the benefit of exemption notification. The learned Advocate pointed out that this case squarely applies to the present case. Further, he said that the Board’s Circular stipulating maintenance of separate accounts will have to be read in the context of Rule 6 and could not have been read de hors Rule 6 and this will become all the more relevant since it is a well laid down principle of law that any circular issued by the Board eyen under Section 378 will have to be in furtherance of and not contrary or in derogation to provisions of the Act or Rules thereof. [Pahwa Chemicals Pvt. Ltd. v. CCE, Delhi 2005 (181) ELT 339 (SC)]. Further reversal of the credit before or prior to the removal of the goods would be sufficient to satisfy the condition of the Notification as held in the following, decisions:
Andhra Pradesh Paper Mills Ltd. v. CCE Grasim industries Ltd. v. CCE, Indore 2005 (66) RLT 363(CESTA T-Del). Wearwell Tyre & Tubes Inds. Pvt. Ltd. v. CCE Bharat Earth Movers Ltd. v. CCE, Bangalore 2001 (136) ELT 225(Tri.-Bang.) CCE, Mumbai, VII v. Pearl Polymers Ltd. 2003 (158) ELT 775(Tri.-Mumbai) Final Order No. 1260/2004 dated 21.07.2004 of CCE v. M/s. AVN Enterprises, Bangalore passed by SZB at Ban galore
5. The learned Departmental Representative reiterated the orders of the lower authority.
6. We have gone through the records of the case carefully. Even though the appellants have not maintained separate accounts, they have reversed the credit taken and attributable to the goods cleared free of duty before the removal of the goods from the factory. The Chandrapur case is squarely applicable because in that view of the matter, one can safely say that no input credit had been availed. Hence, the condition of non-availment of input credit in respect of Notification 30/2004 is satisfied. The QIA cannot be sustained. The same is set aside. We allow the appeal with consequential relief, if any.
5. Furthermore, the point raised by the learned JCDR has been answered in the judgment rendered by the Allahabad High Court in the case of Hello Mineral Water (P) Ltd. (supra) and Tribunal ruling rendered in the case of Tube Investments (supra) and even the Reading of Rule 6(3)(vi) also clearly shows that on reversal of credit, the benefit of notification has to be extended. The appellant have not committed any error in the matter. They have clearly followed the Rule in letter and spirit. Hence, the benefit of these Notifications is available to them. There is no merit in the impugned order and the same is set aside by allowing the appeal with consequential relief, if any.
(Pronounced and dictated in open Court)