Order date – 28 November 2022

Facts –

• The Appellant, Mohit Industries Limited, was confirmed with the demand of excise duty denying exemption Notification No. 30/3004-CE on the ground that once the appellant have availed Cenvat credit on inputs there is contravention of condition of notification.
• Being aggrieve the appellant had filed an appeal.

Issue –

• Whether the appellant is entitled for exemption Notification No. 30/2004-CE in the fact that they are manufacturing dutiable as well as exempted goods by using cenvated inputs and the appellant have reversed 6% of the value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004.

Order –

• The Tribunal finds that as per the condition in Notification No. 30/2004-CE in order to avail notification, appellant should not have availed Cenvat credit. 
• From the sub-rule (3D) of rule 6, it is clear that even though Appellant availed Cenvat credit but in compliance of Rule 6(3), they reversed the credit which will amount to non-availment of credit. With this statutory provision once the appellant complied with the provision of Rule 6(3) by reversing the credit, the condition of the notification automatically stand met.
• The Tribunal relied on the decision in the case of Vineet Polyfab Pvt. Limited wherein it was held that the very same issue was considered and also interpreted the explanation given in Rule (3) as well as the provision of sub Rule (3D) of Rule 6 and came to the conclusion that once an amount under Rule 6(3) has been paid, the condition of notification has been complied.
• Since the penalty is consequential to demand in the present case and the said demand is not sustainable, the penalty on the appellant is also not sustainable.
• The appeal is allowed