Page 124 - GSTL_3rd September 2020_Vol 40_Part 1

58 GST LAW TIMES [ Vol. 40
“(3) A manufacturer or producer of a final product shall be required to
pay an amount equivalent to the Cenvat credit, if any, taken by him in re-
spect of inputs received for use in the manufacture of the said final product
and is lying in stock or in process or is contained in the final product lying
in stock, if, -
(i) he opts for exemption from whole of the duty of excise levia-
ble on the said final product manufactured or produced by
him under a notification issued under Section 5A of the Act; or
(ii) the said final product has been exempted absolutely under
Section 5A of the Act, and after deducting the said amount
from the balance of Cenvat credit, if any, lying in his credit,
the balance, if any, still remaining shall lapse and shall not be
allowed to be utilized for payment of duty on any other final
product whether cleared for home consumption or for export,
or for payment of service tax on any output service, whether
provided in India or exported.”
7. On the plain reading of the above Rule 11(3)(i) (ii), it is clear that as
per sub-clause (2), the credit shall be lapsed only if the exemption under the No-
tification is absolute that means in case of conditional Notification the provision
of lapsing of credit will not apply. This issue has been considered by this Tribu-
nal in various judgments.
7.1 In case of Patodia Filaments Pvt. Ltd. (supra), the Tribunal has ob-
served as under :-
“6. Heard both the sides and perused the records. We find that the notifi-
cation No. 30/2004-C.E., dated 9-7-2004 is not an absolute notification but a
conditional notification issued under Section 5A. The notification has the
condition of non-availment of Cenvat credit. The sub-rule (3)(i) and (ii) of
Rule 11 of the CCR, 2004 are separate. In the present case the sub-rule 3(i)
would thus apply as per which the manufacturer is required to pay an
amount equivalent to the Cenvat credit in respect of inputs used in the
manufacture of said final product and is lying in stock or in process or is
contained in final product lying in stock. In the present case all the condi-
tions enumerated under sub-rule 3(i) has been followed by the Appellant
and he is not required to reverse the entire credit lying in balance on the
date of opting Notification No. 30/2004-C.E., dated 9-7-2004. Therefore, the
balance credit is not liable to be reversed. For the same reason the credit uti-
lised by him for clearance of finished goods or capital goods. We also find
that on similar issues in the case of Wearit Global Ltd. - 2018 (8) TMI 1094-
CESTAT, Janson Textile Processors - 2018 (7) TMI 850-CESTAT-Chennai and
Sitaram India Ltd. - 2018 (10) TMI 11-CESTAT-New Delhi, the credit stands
allowed to the manufacturer.
7. We, therefore, allow the appeals filed by both the Appellants with con-
sequential reliefs, if any. Revenue’s appeal being involved the amount less
than Rs. 20 Lacs is dismissed on the ground of Government’s litigation pol-
icy instruction F.No. 390/Misc/116/2017-JC, dated 11-7-2018.”
7.2 In the case of Kanchan India Ltd. (supra), the Co-ordinate Bench of
CESTAT, Delhi has taken the following view :-
6. After going through the impugned order and appeal papers, we are of
the considered [view] that similar view has been taken by the various coor-
dinate benches, which is as under :

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