K.G. Denim Ltd. Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....notification was not applicable to the goods in respect of which credit of duty on inputs had been taken under the provisions of the cenvat credit rules. ld.commissioner observed, inter alia, that, where the input, duty credit was not availed, the benefit of the notification was admissible.nevertheless, he denied the benefit of exemption to the party. we have heard ld. sdr also.3. the appellants have furnished evidence of input duty credit having been reversed by them on 5-8-2004. they have also relied on the board's circular no. 795/28/2004-cx, dated 28-7-2004, wherein it was clarified that, where an assessee had 2 options, i.e., availing exemption under a notification and availing the benefit of cenvat credit, it was open to him to reverse the credit (if already taken) and opt for availing the benefit of the exemption notification. precisely, in the instant case, what the assessee has done is squarely covered by the board's circular.4. as the assessee reversed the entire cenvat credit on inputs, correlatable to the finished products cleared by them, they are eligible for the benefit of notification no. 30/2004 ibid. accordingly, the impugned order is set aside and the appeal.....

Judgment:

1. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Hence, after dispensing with pre-deposit, we proceed to deal with the appeal.

2. Ld. Commissioner of Central Excise has denied the benefit of Notification No. 30/2004-C.E., dated 9-7-2004 to the assessee and confirmed demand of duty of over Rs. 66 lakhs against them. He has also imposed a penalty of Rs. 10 lakhs on the party. It appears from the impugned order that ld. Commissioner found that the assessee had reversed input duty credit on 5-8-2004 in respect of the inputs in stock as on 9-7-2004, inputs in process as on that date and inputs contained in finished goods as on that date. Ld. Commissioner also took note of the proviso to the Notification which reads as under :- "Provided that nothing contained in this Notification shall apply to the goods in respect of which credit of duty on inputs has been taken under the provisions of the Cenvat Credit Rules, 2002." According to the above proviso, the benefit of the Notification was not applicable to the goods in respect of which credit of duty on inputs had been taken under the provisions of the CENVAT Credit Rules. Ld.

Commissioner observed, inter alia, that, where the input, duty credit was not availed, the benefit of the Notification was admissible.

Nevertheless, he denied the benefit of exemption to the party. We have heard ld. SDR also.

3. The appellants have furnished evidence of input duty credit having been reversed by them on 5-8-2004. They have also relied on the Board's Circular No. 795/28/2004-CX, dated 28-7-2004, wherein it was clarified that, where an assessee had 2 options, i.e., availing exemption under a Notification and availing the benefit of CENVAT credit, it was open to him to reverse the credit (if already taken) and opt for availing the benefit of the exemption Notification. Precisely, in the instant case, what the assessee has done is squarely covered by the Board's Circular.

4. As the assessee reversed the entire CENVAT credit on inputs, correlatable to the finished products cleared by them, they are eligible for the benefit of Notification No. 30/2004 ibid. Accordingly, the impugned order is set aside and the appeal is allowed.