Order date – 20 April 2023

Parties – Shree Shyam Synthetics & Ors. Vs C.C.E. & S.T.-Vapi

Facts –

• The appellants, SHREE SHYAM SYNTHETICS, are engaged in the manufacture of polyester texturized yarn, polyester filament yarn, poly yarn waste, POY Yarn waste falling under chapter no. 54 and 55 of the Central Excise Tariff Act, 1985.
• The appellants opted for notification no. 29/2004-CE dated 09.07.2004 and notification no. 30-2004-CE dated 09.07.2004 with effect from 14.06.2006, and intimation of the same was given to the department on 21.06.2006 along with details of the unutilized balance of finished goods, semi-finished goods (WIP), and input.
• The appellant reversed the cenvat credit of Rs.1,25,039/- on the inputs lying as balance, contained in WIP and finished goods, and thereafter, there was unutilized balance of cenvat credit lying in their RG-3A part II, RG23C amounting to RS.32,32,703/-.
• The adjudicating officer has disallowed the available credit of Rs. 32,32,703/- in terms of Rule 11(3) of Cenvat Credit Rules, 2004.

Issue –

• Whether the carried forward cenvat credit available after the reversal in terms of Rule 11(3) shall be lapsed? 

Order –

• It has been observed by the Tribunal that in case if assessee opts for the exemption from whole of the duty of excise leviable on the said final product under a notification issued under Section 5(A) of the Act and the said final product has been exempted absolutely under Section 5A of the Act, after deducting the cenvat credit in respect of inputs lying in stock or in process or contained in the final product, the remaining amount shall lapse.
• At the same time, it is important to see whether the notification issued is absolute or not. In the present case, the notification is not absolute and is conditional. 
• Hence the credit available after the reversal in terms of Rule 11(3), shall not be lapsed. 
• Appeals is allowed in favour of assessee.