COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, SCO NO 6, SECTOR 1, ROHTAK Vs. GRASIM BHIWANI TEXTILE LIMITED (UNIT BHIWANI TEXTILE MILLS) BTM ROAD, BIRLA COLONY, BHIWANI

JUDGEMENT

(1.) This appeal has been preferred by the appellant-revenue under Section 35G of the Central Excise Act, 1944 (in short, "the Act") against the impugned order dated 07.10.2015, Annexure A-3, passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (in short, "the Tribunal") in Appeal No. E/2181/2008-EX (DB), claiming following substantial questions of law:- For Subsequent orders see CM-11601-CII-2018

(2.) A few facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. M/s Grasim Industries Limited Bhiwani known as M/s Grasim Bhiwani Textile Limited respondent-assessee is engaged in the manufacture of Polyester Viscose Blended yarn and manmade fabrics falling under Chapter Sub heading No.5509, 5100, 55151130 respectively to the Central Excise Tariff Act, 1985. It is also availing the facilities of notification dated 09.07.2004 simultaneously w.e.f 01.07.2006 wherein it is permitted to the respondent to clear excisable goods on payment at the appropriate rate as well as availment of Cenvat Credit of the duty paid on the inputs used in the manufacture of dutiable goods. Notification dated 01.07.2004 provides for clearance of excisable goods without payment of central excise duty but no availment of Cenvat credit on inputs used in the manufacture of goods cleared under this notification. It was observed from the records of the respondent that it had availed the Cenvat credit of service tax on input service which was used in the manufacture of duitable as well as exempted goods whereas as per Rule 6(1) of the Cenvat Credit Rules, 2004 (in short, "the Rules"), the Cenvat credit shall not be allowed on such quantity of inputs or input service which is used in the manufacture of exempted goods or exempted services. On being pointed out by the Department on 09.08.2007, the respondent reversed the service tax credit of Rs 65,21,123/- under protest on 16.10.2007 on the For Subsequent orders see CM-11601-CII-2018 proportional basis of clearance value of dutiable goods and exempted goods. The respondent during the period from January 2007 to March 2007 availed the Cenvat credit of Rs 64,60,537/- of service tax paid on input service which was used in the manufacture of exempted goods in contravention of the provisions of Rule 6(1) of the Rules and the same was recoverable under Rule 14 of the Rules read with Section 11A of the Act. Accordingly, the respondent was issued a show cause notice dated 24.1.2008 as to why the inadmissible credit of Cenvat should not be disallowed and recovered which was paid under protest alongwith interest as applicable and why a penalty for contravention of the provisions of the rules, should not be imposed under the rules. The Commissioner, Central Excise, Rohtak vide order dated 15.7.2008, Annexure A.2, confirmed the demand of Rs 64,60,537/- under Rule 14 of the Rules read with Section 11A of the Act by invoking extended period as applicable and appropriated the amount of Rs 64,60,537/- as already deposited by the respondent by vacating the protest. A penalty of equal amount was also imposed on the respondent under Rule 15 of the Rules read with Section 11AC of the Act. Aggrieved by the order, the respondent filed an appeal before the Tribunal. Vide order dated 7.10.2015, Annexure A.3, the Tribunal allowed the appeal. Hence the instant appeal by the appellant-revenue.

(3.) We have heard learned counsel for the parties.