CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL MUMBAI WEST ZONAL BENCH EXCISE APPEAL NO: 85277 OF 2022 [Arising out of Order-in-Appeal No: SD/258/CE/NGP/APPL/2021-22 dated 13, [SD/258/CE/NGP/APPL/2021-22 dated 13th October 2021] October 2021 passed by the Commissioner of CGST. Customs & Central Excise (Appeals), Nagpur.]

Indoworth India Ltd B-130 MIDC, Butibori - 441108 … Appellant versus Commissioner of CGST, Customs & Central Excise GST Bhavan, Telangkhedi Road, Civil Lines Nagpur - 440001 …Respondent APPEARANCE:

Shri Rupesh Kumar, Advocate for the appellant Shri Ranjan Kumar, Assistant Commissioner (AR) for the respondent CORAM:

HON’BLE MR C J MATHEW, MEMBER (TECHNICAL)

FINAL ORDER NO: 86001/2025 DATE OF HEARING: 13/05/2025 DATE OF DECISION: 30/06/2025 This appeal of M/s Indoworth India Ltd, challenging order¹ of Commissioner of CGST, Customs and Central Excise (Appeals), Nagpur for having upheld the order of original authority for recovery of ₹

16,05,559 under rule 14 of CENVAT Credit Rules, 2004, along with appropriate interest, and imposing penalty of like amount under rule 15 of CENVAT Credit Rules, 2004, questions the very foundation of the attempt to deny them credit taken on duties paid towards procurement of capital goods. The ostensible reason for disentitling them to credit of ₹16,05,559, taken in 2015-16, 2016-17 and 2017-18 upto June 2017, was the alleged utilisation of the said capital goods in the manufacture and clearance of exempted goods which, according to lower authorities, is not permissible and should have been reversed in accordance with rule

6(4) of CENVAT Credit Rules, 2004.

2. Learned Counsel for appellant and Learned Authorised Representative made submissions at length.

3. The appellant had been manufacturing ‘worsted yarn’ on which, in terms of notification no. 30/2004-CE dated 9^th July 2004, duties of central excise were exempted subject to credit not having been taken of duties of central excise paid on ‘inputs’ used in the manufacture thereof. It is seen that the first appellate authority had taken note of the facts thus ‘7.3 Going into the appellant 's contention that there is no bar for taking cenvat credit on capital goods under Notification No. 30/2004-CE dated 09.07,2004 read with Corrigendum dated 09.07.04 is correct, I find that the logic is not applicable in this case, in as much as the appellant have cleared the exempted goods only as seen from the E.R. 1 returns on the record and the restriction on the availment of cenvat credit on capital goods as per. rule 6(4) of the cenvat credit rules, 2004 is applicable in this case, where the capital goods are exclusively used for manufacturing of exempted goods. There is nothing on record to even remotely suggest that the appellant had manufactured dutiable goods during the impugned period and cleared the same on payment of duty. It is equally important to place on record that the intention of amendment in Notification No. 30/2004-CE dated 09.07.2004 with corrigendum dated 09/07/2004 is to give benefit of cenvat credit of capital goods to the manufacturers of dutiable goods as well as exempted goods and not for the manufacturers of only exempted goods. Precisely for this reason the averment of the appellant does not have any force. Therefore, I am of the considered opinion that the appellant have taken the cenvat credit in their books of accounts in contravention of provisions of rule

6(4) of the cenvat credit rules, 2004 & recoverable from them.’

4. The primary claim made on behalf of the appellant is that the capital goods in question had been used for manufacture of goods other than exempted goods and, in support thereof, returns for the period were furnished. These were before the lower authorities and, yet, it was held in the impugned order that ‘RULE 6. Obligation of a manufacturer or producer of final products and a provider of output service. —

xxxxxx (4) No CENVAT credit shall be allowed on capital goods used exclusively in the manufacture