Order date: 23 January 2023

Parties: JINDAL PHOTO A DIVISION OF JINDAL POLYFILMS LTD. Vs C.C.E. & S.T.- VAPI

Facts:

• The Appellant, M/s Jindal Photo A Division Of Jindal Polyfilms Ltd., are engaged in the manufacture of photographic paper, X-ray and Colour Roll films falling under chapter 37. Their final product was exempted from the whole of excise duty. The appellant reversed cenvat credit from their RG 23A Part II account towards amount equal to 5% of the value of the exempted clearances made on 27.06.2011.
• Subsequently, the appellant reversed total amount of duty from their R.G.23A part II account against the raw material in their stock and chose the second option of non-payment of duty and to maintain separate account as provided in Rule 6 of CCR.
• The appellant filed an application before the Deputy Commissioner seeking permission to retake credit of wrongly reversed said amount. In the department's view the amount was correctly reversed as the option once exercised to reverse amount in terms of Rule 6 cannot be changed during the financial year after that the Show Cause Notice was issued to the appellant and after due process of law which got rejected and declined permission of re-credit/ refund.

Issue 

• Whether the Appellant is entitled for recredit/ refund which was mistakenly reversed?

Order

• The Tribunal observed that from the provision of the Rule 11(3) that in case of any dutiable goods became exempted, the assessee is required to reverse the cenvat credit in respect of inputs lying in stock or in process or is contained in the final product as of date of opting for the exemption notification.
• The appellant has mistakenly reversed 5% in terms of Rule 6(3)(i) of Cenvat Credit Rules, 2004. On realising this mistake, they have reversed on input and contained in the finished goods by following the Rule 11(3) they have corrected the mistake, therefore, the amount @ 5% of exempted finished goods reversed by the appellant became excess reversal, hence the same is liable to be recredited/ refunded to the appellant.
• Hence the appellant is entitled for recredit/ refund and interest thereupon, if any, as per law. The impugned order is set aside
• Appeal is allowed with consequential relief.