The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the balance of credit does not lapse under rule 11(3) of the Cenvat Credit Rules, 2004 as it applies only on absolute Exemption notification.
Ruia Rayon Pvt Ltd, the appellant is entitled to carry forward the Cenvat credit after the date of availing of exemption Notification No. 30/2004-CE dated 09.07.2004, in terms of Rule 11(3) of the Cenvat Credit Rules, 2004 and whether the said credit can be utilised for payment of duty.
The case of the Department is that as per Rule 11(3) of Cenvat Credit Rules, 2004, if the appellant avails the exemption the Cenvat credit on the stock as on the date of opting for the said exemption Notification No. 30/2004-CE shall stand lapse and consequently, the same cannot be utilised for payment of duty.
It was submitted that the bar under Rule 11(3) of Cenvat Credit Rules, 2004, is only in respect of absolute exemption Notification and the same does not apply in respect of the conditional exemption Notification and Notification No. 30/2004- CE dated 09.07.2004, is admittedly a conditional notification.
A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) observed that notification No. 30/2004-CE is admittedly a conditional one. In terms of the strict provision of Rule 11(3) of Cenvat Credit Rules, 2004, the bar of lapsing of credit is applicable only when the assessee avails the absolute exemption notification.
As the exemption notification No. 30/2004-CE, is a conditional one, the bar of lapsing of credit shall not apply. In light of various precedents, the Tribunal set aside the impugned order and allowed the appeal.
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