Excise – Cestat Ahmadabad: Even though the output is exempted, but as the appellant received duty paid inputs, and cleared the same after processing on payment of duty, hence Cenvat credit is allowed – Also, this is clear case of Revenue neutral, hence demand cannot sustain – Appeal allowed [Order attached]
GUJARAT SULPHUR LIMITED Vs C.C.E. & S.T.- AHMEDABAD-III
Order date – 23 January 2023
- The appellant, Gujarat Sulphur Limited have cleared the Sulphur Powder which is correctly classifiable under sub-heading No. 2503 0090 which attracts nil rate of duty.
- The case of the department is that since the appellant have cleared the Sulphur Powder which is correctly classifiable under sub-heading No. 2503 0090 which attracts nil rate of duty, the appellant was not entitled for cenvat credit on the inputs used in the manufacture of Sulphur Powder falling under sub-heading No. 2503 0090 of Central Excise Tariff Act-1985.
- Appellant contended that under bonafide belief that the sulphur powder manufactured by them attracts duty under sub-heading no CETH 2503 010 hence availed the cenvat credit and paid the excise duty on the finished goods. Once the excise duty was paid on the finished goods, cenvat credit on the inputs cannot be denied even if it is found that the finished goods cleared by appellant is not otherwise dutiable.
- Whether the appellant is required to reverse Cenvat credit against exempted goods on which duty is paid ?
- The Tribunal observed that there is no dispute that the appellant have paid the excise duty on the finished goods which is more than the cenvat credit availed on the input used in the said finished goods therefore, this is clear case of Revenue neutral, for this reason, demand cannot be sustained.
- The Tribunal also noted that Rule 16 clearly provides that an assessee can receive the duty paid goods in their factory and avail the cenvat credit and while clearing the same out of the factory, the same can be cleared on payment of excise duty.
- The appellant have received the duty paid inputs, thereafter processed the same and cleared after processing on payment of duty on the transaction value, hence Cenvat credit is allowed.
- The appeal is allowed.